Synovus needs $700 mln in additional capital: analyst

Nov 23 (Reuters) - Synovus Financial Corp (SNV.N) needs about $700 million in additional capital given its "outsized" real estate concentration risk and "dangerously high" level of problem assets, said Collins Stewart, which slashed its price target by 69 percent on the stock.

Last week, the Southeast regional bank said it has the capital and earnings capacity needed under the "more adverse" scenario levels of the U.S. Treasury's Supervisory Capital Assessment Program, following a recent capital raise. [nBNG494128]

"While we don't believe the capital statements will have any positive impact on the depressed stock price, management appears reluctant to address the underlying issues: restore its lost credibility and reaffirm expectations that SNV's dangerously high level of problem assets will soon decline," the brokerage said.

Collins Stewart slashed its price target to $1.25 from $4 on the bank's stock.

Shares of the Columbus, Georgia-based bank were up 8 percent at $1.81 Monday morning on the New York Stock Exchange. They traded as high as $8.93 in December last year.

The brokerage said while it has grown increasingly more cautious on the company's prospects in recent weeks, including the potential for Federal Deposit Insurance Corp receivership in the coming months, it has difficulty in predicting the final outcome for the company.

The bank, which had received $968 million under the U.S. government's Troubled Asset Relief Program, has been badly battered as a depleting residential construction portfolio and deteriorating credit markets continue to hurt its profitability.

(Reporting by Brenton Cordeiro in Bangalore; Editing by Deepak Kannan)

((brenton.cordeiro@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: brenton.cordeiro.thomsonreuters.com@reuters.net)) Keywords: SYNOVUS/ RESEARCH COLLINSSTEWART

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