Warren Buffett's company Berkshire Hathaway has announced it is investing $5bn (£3.1bn) in Bank of America.
News of the world famous investor's decision sent Bank of America's shares more than 25% higher.
The loss-making bank, which has been hit hard by the US housing crash and subsequent market crisis, cut 3,500 jobs this month.
Mr Buffett said that he was "impressed" that the bank was "acting aggressively to put their challenges behind them".
"[Mr] Buffet is gaining a reputation as the de-facto investor of last resort/saviour of American corporate might after investing in other banks and General Motors when they were on their knees in recent years," said market watcher Kathleen Brooks from Forex.com.
In July, the bank reported a record quarterly loss after agreeing an $8.5bn settlement relating to sub-prime mortgages.
It is also being sued by insurance group AIG for $10bn. AIG accuses the bank of carrying out a "massive fraud" on bad mortgage debt, something that Bank of America denies.
AIG alleges that Bank of America exaggerated the quality of the $28bn of mortgage-backed investment products it bought from the bank prior to the 2008 turmoil in the financial markets.
Bank of America's share price has halved in value over the past six months. The sharp rise when the market opened took shares up to $8.80. In March they peaked at just under $15.
Source: BBC
www.bbc.co.uk
News of the world famous investor's decision sent Bank of America's shares more than 25% higher.
The loss-making bank, which has been hit hard by the US housing crash and subsequent market crisis, cut 3,500 jobs this month.
Mr Buffett said that he was "impressed" that the bank was "acting aggressively to put their challenges behind them".
"[Mr] Buffet is gaining a reputation as the de-facto investor of last resort/saviour of American corporate might after investing in other banks and General Motors when they were on their knees in recent years," said market watcher Kathleen Brooks from Forex.com.
In July, the bank reported a record quarterly loss after agreeing an $8.5bn settlement relating to sub-prime mortgages.
It is also being sued by insurance group AIG for $10bn. AIG accuses the bank of carrying out a "massive fraud" on bad mortgage debt, something that Bank of America denies.
AIG alleges that Bank of America exaggerated the quality of the $28bn of mortgage-backed investment products it bought from the bank prior to the 2008 turmoil in the financial markets.
Bank of America's share price has halved in value over the past six months. The sharp rise when the market opened took shares up to $8.80. In March they peaked at just under $15.
Source: BBC
www.bbc.co.uk
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