The battered banking sector, including large lenders with branch banks in Connecticut, appeared poised today to regain some of the losses from a day earlier, as investors received solace from more upbeat earnings news from technology companies.
After being hit by fresh concerns about the global banking sector Tuesday, national bank shares gained in premarket trading today.
At 11 a.m., JPMorgan Chase & Co. traded at $19.01, up 92 cents, or 5.1 percent; Bank of America Corp. was at $5.43, up 33 cents, or 6.5 percent; Citigroup traded at $3.11, up 31 cents, or 11.1 percent; and Wells Fargo & Co. was at $13.84, down 39 cents, or 2.7 percent. All have Connecticut banking operations.
In recent weeks, concerns have grown about national banks facing weakening profits, jobs cuts and the need for more government support.
Many expect President Barack Obama’s newly installed government to take dramatic steps to prop up the U.S. financial system. But Obama’s administration will have little choice but to pump more money into the banking sector or create an entity to buy banks’ soured assets such as subprime mortgages so they’ll start lending again.
Both moves would signal a dramatic increase in the government’s involvement in the banking sector, possibly threatening shareholders whose holdings could be wiped out in the event of a government takeover.
Evidence that the banking crisis is worsening overseas has also rattled investors. Monday, the Royal Bank of Scotland, parent of RBS Citizens Bank, which has branches in Connecticut, forecast a loss of $41.3 billion in 2008, leading the British government to increase its stake in RBS to nearly 70 percent and launch a new round of bailouts for the country’s banking industry. (AP)
