12:50PM EST: Bank of America Corp and Citigroup Inc shares plummeted for a sixth straight day on Friday, hammered by fears that the U.S. government could nationalize the banks, wiping out shareholders.
Bank of America shares were down 19 percent to $3.20 in early trading, their lowest level since 1984, while Citigroup shares fell 20 percent to $2, their lowest price since the early 1990s.
Both stocks have lost more than 90 percent of their value in the last year.
The KBW Financial index was down 6.8 percent to 20.42, with Wells Fargo Co shares down 11.6 percent to $10.60, and J.P.Morgan Chase & Co shares down 6 percent to $19.39.
Asked to comment on the rumors, Citigroup spokesman Jon Diat said in an emailed statement that the bank’s capital base is “very strong” and its Tier-1 capital ratio is “among the highest in the industry.”
Diat added, “We continue to focus and make progress on reducing the assets on our balance sheet, reducing expenses and streamlining our business for future profitable growth.”
In London, spokesmen for Bank of America — the U.S. largest bank by assets — declined to comment.
Citigroup’s market capitalization shrank to $11.5 billion, making it worth less than asset administrator Northern Trust Corp. Bank of America stood at $21 billion.
(Sources: Reuters)
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Is it proper to call it “nationalization” when in fact it is just really “bankruptcy”. Every bankrupt person and company passes to the control of a federal “trustee”. Banks at a certain point in their decline are taken over by civil servants. The hiddush is that these are the two largest banks (left) in the United States, and no one quite knows how to reorganize them into something viable – but without banks, a capitalist system collapses.