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There’s really little doubt about it, American banks are going to have to deal with higher capital requirements.And according Reuters, Bank of America is lagging behind its peers in the capital raising game, so it’s looking at ways to collect some cash by selling assets. One analyst estimates that the bank will need to raise around $45 billion by 2019.
But what to sell? CEO Brian Moynihan has said he does not want to sell more shares, and since 2010 the bank has already sold $50 billion worth of assets, including most of its stake in China Construction bank.
So, the truth is, the bank is going to have to dig deeper to find big items to put up for sale.
Right now, it’s considering selling its Indian back-office processing processing operation, some real estate holdings and private equity investments (odds and ends, really).
The real money would come from selling parts of Bank of America’s investment bank or from selling the Merrill Lynch brokerage. They’ll also need to sell off risky loans and and retain profits, but all of that takes time.
Whatever the bank’s executives decide, they’ll have to figure it out fast. Next month it has to submit a capital plan to regulators that will lay out whether or not it will buy back stock or raise its dividend. Plus, the Fed is going to subject the bank (and its peers) to stress tests.