Capital sands

16 December 2009 By Rolfe Winkler

Coffers are replenished but not always with rocksolid capital. Deferred tax assets won t cushion a big fall. But at Citi, for one, they make up a third of tangible common equity and still more after its TARP exit. That raises questions about whether banks are safe enough.

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Citigroup reported $38 billion of deferred tax assets at the end of the third quarter, approximately 32 percent of the bank's tangible common equity, a key measure of bank capital.

The IRS said on Dec. 11 that an ownership change due to the sale of shares by the government would not reduce Citi's ability to retain its deferred tax assets.

Bank of America had deferred tax assets of $23 billion, JPMorgan $11 billion and Wells Fargo $4 billion. The figures represent 19 percent, 11 percent and 6 percent of tangible common equity at the respective banks.

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