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datasets.iitb.crawledDocs.yn_08Oct08_file_18 Maven / Gradle / Ivy

    Updated: New York , Oct 08 06:35 London , Oct 08 11:35 Tokyo , Oct 08 19:35 RESOURCES Bank of America Falls, Dividend Cut on `Recession' (Update3) By David Mildenberg and Andrew Frye Oct. 7 (Bloomberg) -- fell 26 percent in New York, its biggest one-day decline since at least 1980, after chopping its dividend in half and offering $10 billion of new stock to brace itself for an extended recession. Bank of America slid $8.45 to $23.77 at 4:01 p.m. in New York Stock Exchange composite trading. The Charlotte, North Carolina-based company said late yesterday that third-quarter profit dropped 68 percent. That was worse than analysts expected, and the bank cut its quarterly payout to 32 cents a share. Chief Executive Officer , who told investors in July that the bank didn't need to cut its dividend or raise capital, said the U.S. economy slowed in the past 45 days, with little prospect for immediate improvement. Troubled assets rose 37 percent in three months, according to Deutsche Bank AG analyst . ``The recession is going to be a little deeper than we thought,'' Lewis said on the conference call. ``It's going to take some more time and some more pain.'' dropped to $1.18 billion, or 15 cents a share, in the quarter ended Sept. 30, from $3.7 billion, or 82 cents, a year earlier. Bank of America announced results two weeks early. ``We don't look real smart today, given what's happened,'' Lewis said. ``But all in all, we just thought it was prudent to get out there sooner rather than later. Credit Markets U.S. Federal Reserve and Treasury officials are considering new ways of helping credit markets, as banks hoard cash and interest rates soar on corporate short-term borrowing. Stocks fell around the world yesterday on the first full day of trading after the U.S. enacted a $700 billion bank-bailout plan on Oct. 3. The Standard & Poor's 500 Index retreated almost 4 percent. ``The economy weakened materially from the second quarter as evidenced by rising unemployment, bankruptcies and continuing home-price declines,'' Lewis said. The Bank of America share offering has already started, according to a statement, with the company and Merrill Lynch & Co. managing the sale. Bank of America may realize ``a few billion dollars'' more than $10 billion, depending on investor demand, Lewis said. Lewis has been taking advantage of the financial industry's disarray to . In July he bought Countrywide Financial Corp., the largest U.S. home lender, for about $2.5 billion. Last month he agreed to buy Merrill Lynch, the world's largest securities brokerage, for $50 billion. Stock Sale The share sale was widely expected, said Nancy Bush, an independent bank analyst in Annandale, New Jersey. Retail deposits advanced $56 billion to $586 billion in the quarter, boosted by $35 billion from Countrywide. Much of the increase occurred in September from the ``flight to quality,'' in which depositors seek out banks seen as safe places to store cash as other institutions fail, Chief Financial Officer said. Bank of America earned more than $5 billion for five consecutive quarters in 2006 and 2007 and expects to achieve higher profit once the economy rebounds and benefits from Countrywide and Merrill Lynch kick in, Lewis said on the call. ``Bank of America will be among the industry survivors, despite the current discouraging results, and we expect the company's debt to outperform,'' , an analyst at Chicago-based Gimme Credit, wrote in a report today. The global credit crunch has led to more than $580 billion of losses at the world's biggest financial companies, which have responded by raising at least $432 billion in capital. ``You could talk about a miss on estimates, but estimates don't seem to mean as much as they used to,'' Lewis said. ``We thought that having a level of profitability over a billion dollars might distinguish us among our competitors.'' To contact the reporters on this story: in Charlotte at ; in New York at .