BANK OF America, the second biggest US bank by assets, may take a record $6.5 billion (€4.2 billion) provision in the first quarter to cover possible future losses in its home equity and mortgage portfolios, according to Punk Ziegel analyst Richard Bove.

Whether the two portfolios have that level of loss will depend on the economy and developments in the housing markets, Mr Bove wrote in a report published today. The bank, meanwhile, will experience only a shift in equity and still report a profit, he wrote.

Bank of America plans to release first-quarter results on April 21st.

"At the moment, I do not foresee the economy plunging to a level that will substantiate this reserve build," Mr Bove wrote in his report.

"This is due to a belief that the change in the value of the dollar will stimulate growth and that the actions by the Federal Reserve will take effect."

The world's biggest banks and securities firms have disclosed at least $195 billion in writedowns and credit losses since the start of 2007, as mortgage and debt markets seized up.

Mr Bove advised selling financial shares eight months ago, before they tumbled.