U.S. banks need capital under stress tests

Bank of New York Mellon (BK.N) does not need capital, a person familiar with the matter said. American Express (AXP.N), Capital One Financial (COF.N), Goldman Sachs Group (GS.N), JPMorgan Chase (JPM.N) and MetLife (MET.N) also do not need capital, the Journal said.
All the companies declined to comment. In an interview on PBS' "Charlie Rose Show," U.S. Treasury Secretary Timothy Geithner said none of the 19 banks are at risk of insolvency. He also said the government does now want to get involved in day-to-day management at the banks.

STABILITY SOUGHT
Banks may cover any capital shortfalls through a mixture of asset sales, share sales and perhaps the conversion of the preferred shares into common stock.

The government is giving banks needing capital one month to develop a plan to raise it and until November 9 to finish the job. These banks must also review their managements and board of directors to ensure proper leadership.

Banks needing capital may ask the government to issue more preferred shares, or to swap government preferred shares into convertible preferred shares. They cannot repay aid from the Troubled Asset Relief Program until they issue debt not backed by the federal government, and for more than a five-year term.

Calling the new capital a "one-time buffer," the government pledged "to stand firmly behind the banking system during this period of financial strain to ensure it can perform its key function of providing credit to households and businesses."

The tests are a key element of the Obama administration plan to stabilise lenders. The White House will await them before commenting on potential management changes at banks, spokesman Robert Gibbs said.