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Washington - Bank of America will receive $20bn in fresh capital to help shore it up after acquiring Merrill Lynch, the US Treasury Department announced early on Friday.
Treasury also provided an asset guarantee plan to "backstop" $118bn in Bank of America assets.
Treasury said it "will invest $2bn in Bank of America from the Troubled Assets Relief Program (TARP) in exchange for preferred stock with an 8% dividend" to the Treasury.
Treasury and the Federal Deposit Insurance Corporation will also "provide protection against the possibility of unusually large losses on an asset pool of approximately $118bn of loans, securities backed by residential and commercial real estate loans, and other such assets, all of which have been marked to current market value," the statement read.
Bank of America has already received $25bn in capital injections from the Tarp, a US financial bailout fund that helped rescue mostly banks reeling from financial turmoil triggered by a home mortgage meltdown.
That included $10bn for Merrill Lynch, which Bank of America bought in a deal that closed January 1.
The announcement came just hours ahead of the bank's release Friday of its fourth-quarter earnings.
- AFP