Analysts divided on SunTrust Banks' capital position

By Adveith Nair

BANGALORE (Reuters) - Analysts were divided on the capital position of SunTrust Banks Inc (STI.N: Quote, Profile, Research, Stock Buzz), after the U.S. southeast regional bank on Tuesday said it will bolster capital by unloading a big Coca-Cola Co (KO.N: Quote, Profile, Research, Stock Buzz) stake.

While analysts at Robert W. Baird & Co and Morgan Keegan said the bank was adequately capitalized, Sanford C. Bernstein and Friedman Billings Ramsey said the company would eventually need to cut dividend to defend its capital position.

Baird analyst David George upgraded the bank to "outperform" from "neutral," and said the company's capital levels should be adequate to address near-term credit challenges.

He, however, said SunTrust's losses and provision levels will likely remain elevated during the next several quarters.

"We do not believe that STI is out of the woods from a credit perspective," he said.

Morgan Keegan's Robert Patten upgraded the bank to "outperform," saying "we believe that SunTrust should earn its way through the credit challenges, and dividend appears safe."

SunTrust is unloading its 43.6 million share stake, worth more than $2 billion, in Coca-Cola.

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