Bank of America Corp. fell below $6 in New York trading for the first time in 2 1/2 years as concern about Europe’s debt crisis spurred financial-stock declines on both sides of the Atlantic.
Bank of America dropped 9.6 percent to $5.53 as Citigroup Inc. slumped 9.8 percent, leading a 4.5 percent slide in the 81-company Standard & Poor’s 500 Financials Index as of 4:15 p.m. in New York. The Bloomberg Europe Banks and Financial Services Index of 46 firms fell 2.7 percent.
Financial shares are under pressure as European regulators struggle to quell concern that their lenders may be hurt by the sovereign debt crisis. Moody’s Investors Service cut long-term ratings on Bank of America debt last month, saying U.S. support has become less likely for troubled lenders.
Bank of America’s status as the largest U.S. lender makes the Charlotte, North Carolina-based company sensitive to slowdowns in the nation’s economy and drops in employment. Chief Executive Officer Brian T. Moynihan cited those matters at a Sept. 12 presentation, when he said “the environment will continue to be difficult.”
The KBW Bank Index has declined 32 percent so far this year through Sept. 30. Bank of America has been among the worst performers in that group and is the biggest loser in the Dow Jones Industrial Average for 2011.
Bank of America last traded at this level in March 2009, when investors were speculating that some of the biggest U.S. lenders might be nationalized. Bank of America needed a $45 billion injection of taxpayer money to bolster its finances during the financial crisis. The bailout has since been repaid.
Moody’s didn’t rule out the idea that the government might help a struggling bank, saying the rating for Bank of America now incorporates two levels of “uplift due to systemic support, down from four notches previously.”
Bank of America was unprofitable in three of the four quarters ended June 30 as Moynihan, 51, booked more than $30 billion in expenses tied to soured mortgages. He’s also agreed to sell almost $50 billion of assets and preferred stock to build the company’s financial strength. The bank had about $400 billion of cash at midyear.
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