BofA May Need $36.6 Billion in Capital, Analysts Say

Analyst Chris Kotowski said in a report to clients on Tuesday that the bank may need to raise $36.6 Billion capital later this year by converting preferred stock to common, or issuing 5.2 billion shares through the Treasury Department's Capital Assistance Plan.

The Oppenheimer analysts’ team believes that BofA will not be able to raise the necessary capital by issuing more stock, as it is expected that the company will issue stock at a price of $6.24 per share under a Treasury program.

"It is perhaps unusual to model highly dilutive equity raises into earnings forecasts, but we believe that in the current environment, until credit quality stabilizes and capital requirements are more precisely known, it is the prudent thing to do," Oppenheimer said.

However, a spokesman at Bank of America, Scott Silvestri told Bloomberg "we disagree his assumption.”

The bank has already accepted federal aid totaling $163 billion.

Oppenheimer cut its quarterly earnings estimates for the bank to 2 cents a share down from 10 cents, citing higher losses on credit cards and other loans. It also lowered its 2010 EPS $1.85 per share to $0.95.

Kotowski also said Morgan Stanley may post a 59 cent loss, compared with a previous estimate of a 37-cent profit. JPMorgan Chase & Co is likely to earn $1.15 per share this year and $1.05 in 2010, said Meredith Whitney, Former Banking analysts at Oppenheimer.