U.S., European Bank Stocks Surge on Obama’s Plan for ‘Bad Bank’
By Andrew MacAskill and Jon Menon
Jan. 28 (Bloomberg) -- U.S. and European bank stocks surged on speculation the Obama administration may set up a so-called bad bank to absorb toxic assets, and Wells Fargo & Co. said it won’t need additional government aid.
Wells Fargo rose 12 percent, Citigroup Inc. jumped 21 percent, Deutsche Bank AG climbed 22 percent and Lloyds Banking Group gained 46 percent. The Federal Deposit Insurance Corp. may manage the bad bank, buying distressed assets that are clogging balance sheets, two people familiar with the situation said.
“A catalyst for banks everywhere is the expected announcement out of the U.S.,” said Simon Willis of NCB Stockbrokers Ltd in London. “We are seeing a rebound after a sharp selloff in banks last week.”
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Wells Fargo jumped $2.42 to $18.61 at 8:40 a.m., and Citigroup climbed to $4.14 in New York.
London-based Lloyds rose the most in at least two decades to 94.4 pence after Citigroup Inc. analysts led by Tom Rayner in London raised it to “buy” from “hold.” The possibility of nationalization “is more than adequately discounted in the current valuation,” he said in a note today.
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http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aAlJzLgw23dosee also related:
FDIC May Run ‘Bad Bank’ in Plan to Purge Toxic Assets (Bloomberg Update2)
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