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Shares in Bank of America and Citigroup, two of America’s biggest banks, tumbled as they faced a new crisis of confidence over whether they have enough capital to cover losses from toxic assets and global recession.

“The large banks in the United States are not lending, and they’re desperate to conserve capital,” said Dan Alpert at Westwood Capital in New York. “Banks only remain going concerns because the federal government is topping up their equity.”

A profit warning from Germany’s Deutsche Bank on Wednesday and a prediction HSBC may need fresh capital shook confidence in two major European banks previously credited with dodging the worst of the crisis.

The crisis claimed another big scalp — Canada’s Nortel Networks Corp, North America’s biggest telephone equipment maker, filed for bankruptcy.

Citigroup, whose shares dived 23 percent on Wednesday, plans to report quarterly results on Friday and analysts are looking for a fifth straight multibillion-dollar loss.

The bank was also widely expected to provide details of a reorganisation of the company designed to ensure its survival.

Bank of America is close to receiving billions of dollars of support from the U.S. government, a source familiar with the matter said, as it tries to digest Merrill Lynch, the investment bank it bought on January 1, which has billions in troubled assets ranging from commercial real estate to subprime mortgages.

Citigroup has already taken $45 billion (30.1 billion pounds) in government funds while Bank of America and Merrill have received $25 billion.

There is no relief in sight, warned Jamie Dimon, chief executive of rival JPMorgan Chase & Co, which reports its own fourth quarter results later on Thursday.