The US Senate has voted to release the remaining $350 billion (£239 billion) of the US financial bailout fund to President-elect Barack Obama. Some fierce opposition was overcome last night after Mr Obama’s team promised that up to $100 billion would be spent on addressing the mortgage crisis. The Democratic-led Senate voted 52-42 to approve the second half of funds from the Troubled Asset Relief Programme (Tarp) came after a day of market turbulence.

Last night Bank of America was reported to be on the brink of an agreement with US officials that would give it an injection of $15 billion to $20 billion of fresh capital while underwriting $115 billion to $120 billion of its assets.

Earlier in the day, shares in Bank of America fell as much as $2.26, or 28 per cent, to an 18-year low of $7.94, on concerns that the group will need more government cash to absorb bad losses inherited from its acquisition of Merrill Lynch. They recovered slightly to close at $8.32. The group is expected to report its first quarterly loss in 17 years on Tuesday. Bank of America has brought its results forward to today.

Citigroup shares dived to a 16-year low as investors braced themselves for the financial group to announce today its worst loss since the credit crunch began. For the final three months of last year the bank is expected to have dropped into the red by more than $10 billion (£6.8 billion). It will mark the fifth consecutive quarterly deficit and stoke concerns that Citigroup will need another infusion of Government cash, further diluting the holding of existing shareholders, who have seen the value of their shares evaporate on the back of previous government aid and a plunge in their market value.

Speculation was mounting last night that Citigroup could announce plans for further aid. It has brought forward its fourth-quarter results by six days. Citigroup’s shares fell by 70 cents, or 15 per cent, last night to $3.83 in New York after a 23 per cent decline on Wednesday.

Adam Compton, an analyst at GMT Capital, said: “The sale of Smith Barney, a really great business, shows just how desperately it needs capital.” Citigroup sold a majority share in Smith Barney, its wealth management business, to Morgan Stanley this week.

Concerns about further cash injections from the Government also pushed down Wells Fargo’s shares by 12.6 per cent.

Separately, JPMorgan announced yesterday that it narrowly escaped a descent into the red in the fourth quarter, after $1.3 billion of one-off gains helped to offset a $7 billion hit from the credit crunch to leave the US banking group with a $702 million profit.

Jamie Dimon, JPMorgan’s chairman and chief executive, described the figures as “disappointing” and said its results could continue to decline.

The group’s fourth-quarter profit equated to 7 cents a share — well ahead of analysts’ consensus forecast — but resulted from one-off items such as a $627 million gain from bringing the Paymentech credit and debit card processing joint venture with First Data entirely under its own roof.

JPMorgan also announced its full-year profits for 2008, with the group recording a $5.6 billion surplus, well below 2007’s $15.4 billion. The shares fell 6 per cent to $24.34 in New York.

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