Citi, BofA preferred shares offer bargain-Barron's

NEW YORK, June 14 (Reuters) - Preferred shares in banks hammered by the financial crisis have come roaring back, but bargains may still exist at Citigroup Inc (C.N: Quote, Profile, Research) and Bank of America (BAC.N: Quote, Profile, Research), according to a report in the latest issue of Barron's financial newspaper.

Prices of some preferred shares in the sector have already tripled or quadrupled, but "there could be further gains in the still-depressed preferred issues from Bank of America, now yielding about 10 percent," the newspaper said.

Citi is planning to swap more than $20 billion of its preferreds to common shares as part of a massive exchange offer, the report said.

Under terms of the proposed swap, if shareholders then sell their common stock it would yield a gain of 18.6 percent, the newspaper said.

The report cautioned that preferred investors should not expect the fat yields of two or three years ago.

"But Bank of America's preferred seems to offer good value and Citi's provides an attractive route into a beleaguered company that could look good again in a few years," Barron's said. (Reporting by Bill Berkrot, editing by Martin Golan)