Bank of America Seeks Capital

Bank of America announced its plans to raise capital by selling stock and slashing dividend payments, after reporting third quarter results of $1.18 billion, down from $3.7 billion a year earlier.

The lower earnings in the third quarter compared with a year earlier were caused by increase in provision expense, as well as the rising cost of credit, particularly brought on by Countrywide Financial Corporation, according to a Bank of America release. This was the first time Countrywide results were factored into Bank of America’s quarterly earnings.

As far as a silver lining, Bank of America pointed out that it is also benefiting from “consumer and business flight to safety,’ illustrated by year-over-year increases in loans and especially deposits. The company also said that it continues to increase the number of customer accounts and make progress in investment banking.

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In addition to selling stock, in order to raise capital, the board of directors decided on a dividend reduction of $0.64 per share, assuming the current number of issued outstanding shares. The quarterly dividend on common stock of $0.32 will be paid on December 26 and would add more than $1.4 billion to capital each quarter, Bank of America said.

“These are the most difficult times for financial institutions that I have experienced in my 39 years in banking,” said Kenneth Lewis, chairman and CEO of Bank of America, in the release. While Lewis noted that investors are disappointed with the dividend reduction, he said: “It it not a decision we made lightly. However, we cannot pay out what we have not earned.’

In the release, Bank of America noted the recent acquisition of Merrill Lynch. The company has begun to announce the senior management team of the combined company and transition teams are beginning to map out activities (see Thain To Head Wealth Management at Bank of America).

Calvert Sets Afloat Global Water Portfolio

Calvert launched its latest sustainable and responsible investment (SRI) mutual fund, part of a new series of investment portfolios known as Calvert Solution Strategies.

A news release said the Calvert Global Water Fund invests in utility, infrastructure, and technology companies active in managing water resources and will be sub-advised by KBC Asset Management International, Ltd., of Dublin, Ireland, which boasts an eight-year track record of strong performance in the global water sector.

“We see strong demand for such a fund from individual and institutional investors. We also see a tremendous opportunity to help educate investors on the societal concerns over ensuring equitable access to clean water and enable investors to be part of the solution,” said Craig Cloyed, president at Calvert Distributors, Inc., in the news release.

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Calvert Solution Strategies consist of portfolios that selectively invest in companies that produce products and services designed to solve some of the most pressing environmental and social challenges. Generally, these strategies will seek to invest in companies that produce or market technologies that enhance the environment, public health, and quality of life and in turn contribute positively to addressing U.S. and global sustainability challenges.

Calvert also recently released “Unparalleled Challenge and Opportunity in Water,” a white paper detailing the key drivers for the needed $1 trillion in annual investments in water-related infrastructure and services worldwide, as well as the resulting opportunities for investors.


More information is availalbe at www.calvert.com.

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