UPDATE 1-Zions can maintain current capital levels: Citigroup

miércoles 25 de junio de 2008 16:24 CEST

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June 25 (Reuters) - Zions Bancorp (ZION.O: Cotización) will likely maintain current capital levels, and will not need a highly dilutive raise even under more severe credit conditions, according to an analyst at Citigroup.

Shares of the bank were trading up as much as 10 percent in Wednesday morning, after analyst Greg Ketron began coverage of the stock with a "buy" rating and price target of $47.

He estimates that Zions, which operates banks throughout the western United States, could raise a combination of $400 million to $500 million in preferred and hybrid capital.

"Credit and capital uncertainty is an industry risk, but we believe the stock's valuation is out of line with the company's fundamentals at current levels despite credit losses and mark-to-market risk continuing to limit earnings-per-share growth," Ketron wrote in a note to clients.

Zions is different from others in the industry, as it has the "best organic growth capabilities" as well as the strongest growth footprint, Ketron said.

The bank has also posted the best loan, deposit, and book value growth on a per share basis over the past 10 years compared with its peer group, and is an "answer to the question of which franchises to own longer-term at these depressed prices," Ketron said. Shares of the company rose $3.06 to $34.05 in morning trade on Nasdaq. (Reporting by Tenzin Pema in Bangalore; Editing by Jarshad Kakkrakandy; )