* Bank of America get fresh capital boost
* Citigroup says to split into two operating units
* For up-to-the-minute market news, click []
(Adds quote, byline, updates prices)
By Ellis Mnyandu
NEW YORK, Jan 16 (Reuters) - U.S. stock index futures rose
on Friday after Bank of America <BAC.N> received a $20 billion
government capital injection, overshadowing signs of more
fallout from the credit crisis for the financial sector.
Bank of America, the largest U.S. bank, followed the news
of fresh government aid with a report of a $1.79 billion
fourth-quarter loss, excluding Merrill Lynch, which it recently
acquired. For more see [].
Citigroup <C.N> reported a fourth-quarter net loss of $8.29
billion and said it would split into two operating units.
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Investors found comfort, however, from the government's
apparent push to stave off failure of yet another major bank,
according to analysts.
"Everybody out there believes that the government will not
let these banks fail and that's what giving the market a bounce
today," said Matt McCall, president of Penn Financial Group in
Ridgewood, New Jersey.
"But I still don't know how we're going to pay for all of
this. It's either our taxes are going to get raised very high,
or this is going to crush the U.S. dollar, which leads me to
like commodities right here."
S&P 500 futures <SPc1> rose 14.80 points and were above
fair value, a formula to evaluate pricing taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures <DJc1> gained
128 points and Nasdaq 100 futures <NDc1> climbed 18.25 points.
Citigroup shares rose 6 percent before the bell to $4.06,
while Bank of America gained more than 5 percent to $8.80. Both
stocks are components of the Dow Jones industrial average.
The advance suggested benchmark indexes will open with
gains of nearly 2 percent, and extend a worldwide stock market
run-up which lifted Asian stocks overnight and had European
stocks up 3 percent on Friday.
Concerns about mounting credit losses for banks and worries
about Citigroup roiled the market this week, contributing to a
pullback in the market's advance from its Nov. 21 bear market
low. The benchmark S&P 500 started 2009 up more than 20 percent
since that low, but ended Thursday up 12 percent.
Citigroup's plan had been anticipated for some time and is
seen as a way to shed troubled assets. For the latest quarter,
Citigroup posted $28.3 billion of writedowns and credit losses,
bringing its total credit losses over 15 months to more than
$92 billion. []
The help for Bank of America, announced by the Treasury
Department, the Federal Reserve and Federal Deposit Insurance
Corp, comes out of the government's $700 billion bailout fund
in exchange for preferred stock. []
(Editing by James Dalgleish)
