Banking Fear - Citi, BAC, JPM

From Yahoo! Finance: US mulls Fresh aid Package for Bank of America
The federal government is considering a fresh multibillion-dollar aid package for Bank of America Corp. to help it absorb losses at Merrill Lynch.

Shares of both Bank of America plummeted more than 20 percent. Bank of America could get another capital infusion from the government, and possibly secure government guarantees against losses on problem loans. A fresh capital injection could come from the Treasury Department's $700 billion bailout pot, while any money that might be put up for loan guarantees could come from a mix of government sources.

Bank of America has received a total of $25 billion in capital injections from the Treasury bailout fund, called the Troubled Asset Relief Program, or TARP. That includes $10 billion for Merrill Lynch & Co., which Bank of America bought in a deal that closed Jan. 1.

Bank of America, which reports its fourth-quarter and annual results Tuesday, declined comment about a new aid package Thursday. The Wall Street Journal late Wednesday reported that the government was nearing a new deal with Bank of America, and said details of the aid are expected to be announced with earnings next week. Some analysts are predicting the nation's biggest bank by assets to report a loss or lower-than-expected earnings for the fourth quarter. Its board has already halved the company's dividend and could slash the payout again.

From Yahoo! Finance: JPMorgan posts profit, but "disappointing" one
JPMorgan Chase narrowly avoided a loss in the fourth quarter, indicating that it is weathering the financial crisis better than some of the other big banks. But the meager profit was driven by its acquisition of Washington Mutual Inc., and the bank added $4.1 billion to loan loss reserves -- proving that it is not immune to the deepening global recession.

Chief Executive Jamie Dimon called the quarter "very disappointing." Results were hurt by $2.9 billion in markdowns in JPMorgan's investment bank, and losses in various types of loans -- from mortgages to home equity loans to credit cards to commercial real estate loans.

"If the economic environment deteriorates further, which is a distinct possibility, it is reasonable to expect additional negative impact on our market-related businesses, continued higher loan losses and increases to our credit reserves," Dimon said in a statement. The New York-based bank on Thursday reported a profit of $702 million, or 7 cents per share, down 76 percent from $2.97 billion, or 86 cents per share, a year ago.

During the fourth quarter, JPMorgan's investment bank posted a loss of $2.4 billion, after a profit of $124 million a year ago. Card services also reported a loss of $371 million, after a profit of $609 million a year ago, as more cardholders failed to make their payments. Losses in cards are expected to rise as unemployment increases. Dimon said that in his opinion, unemployment will rise to between 7.5 percent and 8 percent, at minimum.

The retail financial services segment reported a 15 percent drop in profit to $624 million, due to losses in consumer lending. Income from asset management fell to $255 million from $527 million, while income from the corporate and private equity business rose to $1.5 billion from $270 million. The commercial banking unit reported a record profit of $480 million, up from $288 million a year ago. Treasury and securities services also posted a record profit, of $533 million, up from $422 million. For all of 2008, JPMorgan Chase posted a profit of $5.6 billion, or $1.37 a share. That was down from a record annual profit in 2007 of $15.4 billion, or $4.38 a share.

From MarketWatch: Financials Fall as Citi Shares Drop (1/14/2009)

Investors focused their attention on Citigroup Inc. shares of which fell below $5 for the first time since Nov. 21. They touched an intraday low of $4.44.

The fall came following reports that Citi will soon unveil a plan to unload several businesses and reduce its size by one-third. The moves will effectively dismantle the old, super-sized Citi model pioneered in part by former chief Sandy Weill.

Fears about Citi also rose after its announcement Wednesday that it will report fourth-quarter financial results before the open on Friday, nearly a week earlier than its previously scheduled Jan. 22 release date. Citi did not give a reason for the change in its timetable.

Royal Bank of Scotland Group said it sold a 4.26% equity stake in Bank of China for about $2.3 billion. The decision is part of the ongoing review of the company's businesses announced in October.

Barclays PLC saw its shares fall more than 14%. Barclays said it will cut about 2,100 jobs in investment banking and investment management, and further headcount reductions may be in the offing.

Deutsche Bank traded down 9%. The German bank said it will report a loss of about $6.4 billion for the fourth quarter, citing weak markets and the impact of further write-downs. Germany's largest listed bank said "exceptional market conditions" severely hurt its sales and trading operations. It also faces losses from its efforts to slash exposure to risky assets an impairment charge at fund unit DWS Scudder and "substantial" injections into money market funds.

HSBC Holdings shares at one point fell to their lowest level since March 4, 1999. A Morgan Stanley report published Wednesday said the bank, which had so far avoided the worst of the financial crisis, may need to raise $30 billion in equity and halve its dividend.