Wednesday, 19 November 2008

JPMorgan, Citigroup, BofA hit multiyear lows

NEW YORK (Reuters) - Shares of JPMorgan Chase & Co , Citigroup Inc and Bank of America Corp tumbled to multiyear lows on Wednesday on expectations that deteriorating credit conditions and a contracting economy will weigh heavily on the three largest U.S. banks.

JPMorgan shares fell as much as 9.6 percent to their lowest level in 5-1/2 years, predating the arrival of Jamie Dimon as chief executive. Citigroup dropped as much as 14.1 percent to a 13-year low, and was surpassed as the fourth-largest bank U.S. by market value by U.S. Bancorp, which has one-eighth as much in assets. Bank of America shares fell as much as 10.9 percent to an 11-1/2-year low.

The three banks are in the Dow Jones industrial average .DJI>, and even before Wednesday had lost more than $450 billion of market value from recent highs -- Bank of America in November 2006, Citigroup the next month, and JPMorgan in May 2007.

Investor worries swelled after Credit Suisse analysts said two big, new commercial loans were near default. That fanned fears that credit deterioration that has already saturated the residential mortgage market and worsened in credit cards was heading to a major new area, commercial real estate.

Meanwhile, new government data showed that consumer prices dropped in October at the fastest pace ever, while housing starts that month were the fewest on record. The data showed how fast the already troubled U.S. economy is weakening.

"Part of the dread is about just how bad the financials have been doing," said Alan Lancz, president of Alan B. Lancz & Associates Inc, a Toledo, Ohio investment adviser. "Even in those that are supposed to be the leaders -- JPMorgan, Wells Fargo, Bank of America -- there's just tremendous, continued declines."

Citigroup on Wednesday also said it agreed to buy $17.4 billion of assets remaining in a series of funds known as structured investment vehicles. Such vehicles were among the earlier major classes of investments to implode in the global credit crunch that began last year. On Monday, Citigroup announced 52,000 job cuts.

In afternoon trading on the New York Stock Exchange, JPMorgan shares were down $2.63, or 8.2 percent, at $29.51, after earlier falling to $29.06; Citigroup was down $1.05, or 12.6 percent, to $7.31, after earlier falling to $7.18; and Bank of America was off $1.60, or 10.5 percent, to $13.59, after earlier dropping to $13.54.

Wells Fargo, the second-largest U.S. bank by market value after JPMorgan, was down $1.59, or 5.9 percent, to $25.61 in afternoon trading. Wachovia Corp, which Wells Fargo is buying, fell 34 cents, or 6.5 percent, to $4.92. Merrill Lynch & Co, which Bank of America is buying, fell $1.05, or 9.2 percent, to $10.35.

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