Credit crunch bite worse than its bark as banks bite off more than they can chew


Bank of America shares yesterday hit their lowest levels since the early 1990′s, after analysts speculated that the bank needs at least £58 billion to restore capital to adequate levels.

Shares have been hit hard and have plummeted to under $6, down from the $40+ seen a year ago. Real Estate organisation, Ramsey Group recently stated that the banks ‘tangible capital equity is too low, particularly for an organisation with questionable near-term profitability and credit costs’.

Investors are also being cautious following last weeks announcement of a fourth quarter loss of $2.4 billion, and the emergency $20 billion loan from the federal government to prop up the purchase of Merrill Lynch, which completed on the 1st January.

Like many which have tried to buy up their stricken rivals, the bank appears to have bitten off more than it can chew amid the crunch of the ongoing financial climate.

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