The US banking sector was shaken on Wednesday by concerns over news that Bank of America is counting on a new multibillion-dollar capital injection from the government, reports the FT. People close to BofA said it had told the government it wanted to scrap its takeover of Merrill Lynch last month after realising the depth of Merrill’s Q4 losses. BofA, which has already gained $25bn in federal funds, closed the deal on Jan 1 only after a pledge of billions of dollars of aid from Washington, they added. The WSJ reports that the government is close to finalising such a deal for additional aid, and that a possible arrangement might protect BofA from losses on Merrill’s bad assets.

This entry was posted by Gwen Robinson on Thursday, January 15th, 2009 at 5:48 and is filed under Capital markets. Tagged with BofA, merrill lynch. Edit this entry.