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Some major banks managed to wrest concessions from the government in closed-door negotiations over their "stress tests" that helped them put the best face on their results, financial analysts, industry officials and sources said.
The banks were intent on sending a message that they were strong enough to weather the economic storm and didn't need additional capital infusions from the government that could all but nationalize their franchises.
Citigroup successfully pushed to lower the amount of common equity it needs to raise to $5.5 billion by applying $52.5 billion from capital it has not yet reworked. It also was able to get a credit for the sale of a unit that has not been completed.
Investors initially were relieved by the generally benign results. But executives were still chafing in conference calls yesterday that their banks didn't end up looking better. Some acknowledged intense negotiations that began after they had learned of their preliminary results about two weeks ago. Several banks were displeased with the amount of capital the government concluded they must raise and lodged their complaints with Fed leaders.
When asked in a call with reporters about its seeming success in the negotiations, Citigroup Chief Financial Officer Edward Kelly said the firm still had issues with the tests. He said the principal difference of opinion centered on revenue the bank would generate if the economy worsened. He declined to discuss the specifics, saying talks with regulators were confidential.