MercoPress. South Atlantic News Agency

Ten US leading banks need 74.6 billion in extra funds

US bank Wells Fargo has said it plans to raise 7.5 billion US dollars from selling new shares, a day after the US Treasury said 10 banks needed to boost reserves. Morgan Stanley is also hoping to raise 3.5 billion from share sales. Bank of America said it planned to sell assets and raise capital to secure the 33.9 billion it needs.

On Thursday, the US Treasury said that 10 of America's 19 largest banks needed to raise a combined total of 74.6 billion of extra funds.

That was the main finding of the so-called “stress tests” which were carried out to see if the banks had sufficient capital to cope should the recession worsen.

The banks that require extra capital have been given until 8 June to finalise their plans to do so, and get them approved by regulators.

Separately, Fannie Mae, the mortgage finance company, has said it needs an extra 19 billion in government aid after reporting a loss of 23.2 billion for the first quarter.

Wells Fargo's shares are to be priced at 22 USD each a discount of 11% to Thursday's closing price, with Morgan Stanley's new shares priced at 24 each, a discount of nearly 12% to Thursday's close.

Ken Lewis, chief executive of Bank of America - the bank which requires the most new money - has said that he will stay at the bank to help it raise the cash and repay government loans.

Mr Lewis has faced criticism for his purchase of Merrill Lynch and some investors have called for his resignation.

Other banks that need more money include GMAC, the former financial arm of General Motors, which needs 11.5 billon; Citigroup, which requires an additional 5.5 billion of funds, and Morgan Stanley, which has been told to find 1.8 billion.

The 19 banks that were tested by Treasury Department and Federal Reserve officials account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy.