16 Jan 2009

Bank of America seeking more bailout funds

8:07 am on 16 January 2009

Bank of America, the largest bank in the United States, is seeking additional funds from the federal government.

The bank needs more funding to help its acquisition of the former giant Wall Street brokerage, Merrill Lynch & Co.

Fourth quarter losses at Merrill have exceeded expectations.

The Wall Street Journal reported on Wednesday that Bank of America might be unable to complete the deal, cutting Merrill adrift.

Talks with the Treasury Department began in mid-December.

The size and terms of any aid that could result are still being finalized. Details are expected to be announced with Bank of America's fourth-quarter earnings, which are due on 20 January.

Bank of America declined to comment on Thursday. The White House declined to comment on the original report in the Wall Street Journal.

Bank of America and Merrill Lynch have already received $US25 billion in federal funding, in October.

Citigroup result awaited

The ominous news about Bank of America's need for more help came amid new danger signs for the financial sector.

Analysts expect Citigroup to report a fifth consecutive quarter of losses on Friday. Citigroup shares fell below $US5 per share on Wednesday.

Citigroup has already received $US45 billion in federal funds, including $US20 billion in November to avoid a collapse.

The sale of Merrill was announced in mid-September on the same weekend that Lehman Brothers Holdings Inc filed for bankruptcy protection.