Bank crisis deepens anew

Source: Reuters

FRANKFURT/TOKYO (Reuters) - Banking giants in Europe and the United States faced fresh questions about their ability to ride out a global financial crisis which is set to prompt a European Central Bank interest rate cut later on Thursday.

Shares in Bank of America and Citigroup, two of America's biggest banks, tumbled as they faced a new crisis of confidence over whether they have enough capital to cover losses from toxic assets and global recession.

"The large banks in the United States are not lending, and they're desperate to conserve capital," said Dan Alpert at Westwood Capital in New York. "Banks only remain going concerns because the federal government is topping up their equity."

A profit warning from Germany's Deutsche Bank on Wednesday and a prediction HSBC may need fresh capital shook confidence in two major European banks previously credited with dodging the worst of the crisis.

The crisis claimed another big scalp -- Canada's Nortel Networks Corp, North America's biggest telephone equipment maker, filed for bankruptcy.


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