Washington  - A government review of the health of the US financial industry has found that 10 of the 19 largest US banks need a combined 75 billion dollars to weather the continuing recession, US regulators said Thursday.

Treasury Secretary Timothy Geithner said that much of the extra capital could be raised from private investors, and many banks would be able to meet the government's demands by simply converting preferred shares into common equity.

The capital shortages revealed by the so-called stress test review, which was designed to check whether banks have enough resources to survive another dip in the US economy, were lower than many outside analysts had expected.

Bank of America Corp faces the largest task, needing to raise 33.9 billion dollars in extra capital. That could force the bank to make the government a major stakeholder in exchange for extra support.

Other top banks that will be asked to raise more money: Citigroup Inc needs 5.5 billion dollars, Wells Fargo & Co needs 13.7 billion dollars, and Morgan Stanley must find 1.8 billion dollars. GMAC LLC, the former financing arm of ailing carmaker General Motors Corp, must raise 11.5 billion dollars.

Major banks including JPMorgan Chase & Co, Goldman Sachs Group Inc and American Express Co passed the stress tests. The government has already invested hundreds of billions of dollars in Wall Street since the financial sector was brought to the brink of collapse in September.

Some of the healthier banks are now considering repaying the government loans, but Geithner said they would first have to prove a "material ability" to keep making private loans to US consumers. Credit access has been severely curbed since September, fanning a US recession that has already stretched for 16 months.

The stress tests lie at the centre of President Barack Obama's effort to nurse the US financial system back to health, which is considered the only means of pulling the United States out of a wider economic downturn, considered one of the worst since the Great Depression.

Geithner said the results would help markets get a better sense of the state of the US financial system. But he said most banks still had a long way to go to restore their balance sheets, which have been damaged by losses related to the housing market downturn.

"I think there is reassurance in clarity," Geithner told reporters. "We are at the early stages of repair and recovery of the financial system."

Banks facing capital shortfalls will have until June 8 to present plans and until November 9 to meet the demands. Some are expected to make up the difference from private investors, while others will have to look for more government support.

Wells Fargo immediately announced a new, 6-billion-dollar stock offering to raise some of the money. Morgan Stanley promised its own 2-billion-dollar stock sale and a 3-billion-dollar debt offering.

For many investors, the results of the months-long review - overseen by an array of government regulators - demonstrated that most banks may be more solvent than expected.

US stock markets jumped more than 1 per cent Wednesday as details of the stress tests were leaked but erased those gains on Thursday just before the official release.

Douglas Elliot, an economist with the Brookings Institution, had predicted that banks would need between 100 billion-200 billion dollars to help them absorb new losses from mortgage-related assets.

The stress-test results could still prompt the Obama administration to take a more hands-on approach to Wall Street, forcing some banks to give the government increasing shares and even making changes in top management.

Geithner would not rule out management changes at banks that return to the government for more loans. Bank of America's chief executive Ken Lewis is considered one of the most likely casualties.

It would not be the first time: The administration asked General Motors chief executive Rick Wagoner to resign earlier this year as part of a deal to continue supporting the country's largest carmaker.

Obama launched the stress tests in February to get a better sense of how banks were managing the current financial crisis. The 19 banks in the stress test were selected for having more than 100 billion dollars in assets. Together, they hold two-thirds of the assets and more than half of the loans in the US banking system.

Some 600 billion dollars have already been invested by the government to keep Wall Street and the US car industry alive. About 100 billion dollars more is left over from a financial rescue package that was approved by Congress in October.

Bank of America and Citigroup have already received 45 billion dollars in emergency loans from the federal government. Wells Fargo has taken 25 billion dollars. (dpa)