Legends of the fall: Bank of America’s stock slides below $5 a share

December 20, 2011 – NEW YORK – Shares of Bank of America Corp closed below $5 on Monday for the first time since the depths of the bear market in March 2009. The stock closed at $4.99, down 4 percent, after dropping as low as $4.92. The shares haven’t closed below $5 since March 11, 2009. Shares of financial institutions have declined on worries about the global economy and possible exposure to sovereign defaults in Europe. Bank of America, in particular, faces concerns about whether it has enough capital to absorb mortgage-related losses and meet new international standards. With more than 275 million shares traded so far, the volume-weighted average price was $5.0336. Bank of America accounted for roughly 6 percent of composite volume on the New York Stock Exchange, NYSE Amex and Nasdaq. Bank of America now has a market capitalization slightly above $50 billion, making it less valuable than Amgen Inc or American Express Co , and only a little more than CVS Caremark. –Yahoo 

Contagion spreading: The European Central Bank warned on Monday risks to financial stability in the euro zone have increased considerably in the second half of this year, pointing most prominently to concern about growing contagion effects from the debt crisis, and bank funding strains. The 17-country bloc’s central bank said that, in the worst case, there could be a return to a global recession, which in turn would hit the already-weak banks. It said the risk of two large banks defaulting within the next year had risen to the highest level in the measure’s four-year history. In its twice-yearly Financial Stability Report, the ECB said “the sovereign risk crisis and its interplay with the banking sector worsened in an environment of weakening macroeconomic growth prospects. Ultimately, the transmission of tensions among sovereigns, across banks and between the two intensified to take on systemic crisis proportions not witnessed since the collapse of Lehman Brothers three years ago,” the report said. The ECB singled out four main risks: the potential for a further intensification of contagion, market funding strains, an increase in credit risks for banks in combination with the economic slowdown, and an abrupt unwinding of global imbalances. The ECB reiterated its criticism of politicians’ slow response to the crisis, saying it had made things worse. “A bumpy ratification process appears to have contributed to additional market uncertainties,” the ECB said in its report. –Reuters

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