Citi is pleased with Fifth Third’s (FITB) $2 billion capital raise and says the bank’s capital position is now “above average.”:
Assessing capital strength is very subjective, but our stress tests on broker home equity portfolio, residential construction and commercial portfolios show that the company can sustain a 8% Tier 1 Capital Ratio. We would view it is in an above average position relative to peers with respect to capital, and we are not anticipating another capital issuance in near term.
Citi also slashed target from $24 to $11 and increased its risk rating from Hold/High Risk to Hold/Speculative due to “uncertainties in the credit environment” and the suspicion that Fifth Third still has above average credit risk exposure.
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