Financials Weekly Notes: Bank of America & Deutsche Bank

-5.26%
Downside
37.92
Market
35.93
Trefis
BAC: Bank of America logo
BAC
Bank of America

Banks are having a good run this week – a rarity in recent times when investors have been more than eager to shun bank stocks at the smallest sign of trouble in the U.S. or Euro-zone economies. Efforts from European leaders who are are putting together a deal to support the European bailout fund (see European Rescue Plan Lifts Investor Sentiment and Bank Stocks) and coordinated action from global central banks helped give the market a boost of confidence. (see The Fed Serves Another Round: Gives Banks a Shot of Liquidity to Fight the European Blues) The promise held by these events more than made up for the negative impact from S&P’s announcement that it is downgrading the credit rating of major banks – including Morgan Stanley (NYSE:MS), Bank of America (NYSE:BAC), Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) (see S&P Bank Downgrades No Match for Bernake’s Bazooka).

Bank of America

Bank of America had an eventful week, with its shares initially rising over trading on Monday when details about Europe’s rescue plan were reported and then falling Tuesday when S&P downgraded its long-term rating one-notch to ‘A-‘. Wednesday all major banks posted at least a 7% rise in market value.

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Incidentally, Bank of America was the only major banking institution that did not see a downward price correction over trading on Thursday, thanks to TD Banks announcement that it had completed the $8.5 billion acquisition of the MBNA Canada credit card unit from Bank of America. [1] The deal had been announced in mid-August and would help the bank focus on its U.S. card operations (See Bank of America Sharpens Focus on US Cards, Raises Cash Reserves with Sale).

See our full analysis for Bank of America’s stock

Deutsche Bank

The largest German bank was one of the largest gainers among banks this week with its share price seeing a 20% growth in value over trading. The bank’s stock suffered considerably last week after fears that Germany has also been caught up in the European debt crisis gripped investors. Deutsche Bank entered into talks with takers for its asset management business this week with the bank announcing its plans to spin-off this unit last week to raise capital to meet stringent capital requirements.

See our full analysis for Deutsche Bank


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Notes:
  1. TD Bank Group completes acquisition of MBNA Canada’s credit card business, Bloomberg, Dec 1 2011 []