(Bloomberg News) Meredith Whitney, the bank analyst who correctly predicted Citigroup Inc.'s dividend cut three years ago, said Bank of America Corp. has no urgent need to raise capital. The shares rose as much as 11 percent.
"I don't think that there's a mad dash to raise capital immediately," Whitney said today in a radio interview on "Bloomberg Surveillance" with Tom Keene and Ken Prewitt. "They're going to steadily raise capital over time."
Bank of America has lost more than half its value on the New York Stock Exchange this year as investors speculated the Charlotte, North Carolina-based lender will have to access the public markets. The speculation spurred one blogger to write that the company was considering a merger with JPMorgan Chase & Co., talk Bank of America dismissed as "baseless" in an internal memo obtained by Bloomberg News.
Bank of America rose 8.7 percent to $6.85 on the New York Stock Exchange at 11:12 a.m., the biggest gain on the 24-company KBW Bank Index. The shares, which rose as high as $6.97 earlier today, may triple, according to Anthony Polini, an analyst at Raymond James Financial Inc., who cited the bank's "excellent" liquidity and flexible balance sheet in a note to clients today. Polini didn't give a time frame.
Chief Executive Officer Brian T. Moynihan, 51, has said the company won't need to issue shares to comply with new international capital standards and to settle claims surrounding defective mortgages.
Moynihan agreed to sell the bank's Canadian card unit, with $8.6 billion in loan balances, and plans to leave the U.K. and Irish card markets, Bank of America said this month. The bank has been forced to write down credit-card and mortgage units acquired by Moynihan's predecessor, Kenneth D. Lewis. Bank of America has sold more than 20 assets or units since Moynihan took over last year.
Moynihan is "the right guy for the job," said Whitney, 41, who started New York-based Meredith Whitney Advisory Group LLC in 2009. Bank of America probably won't need to raise capital in the public markets, and shareholders should "hold on," Whitney said.
Bank of America, the biggest U.S. bank by assets, said the speculation it's considering a merger with JPMorgan doesn't "make practical sense," according to the memo. Jerry Dubrowski, a spokesman for Bank of America, confirmed the contents of the memo.