NEW YORK, Dec 24: Bank stocks yielding close to 10 per cent might tempt investors in a market where such income is rare, but the payouts are likely to plummet if not disappear.

While yields on many bonds, especially those issued by the US Treasury, are approaching zero, regional banks like Marshall & Ilsley Corp and SunTrust Banks Inc have payouts of 9.96 and 7.6 per cent, respectively.

But the yields are under pressure as banks grapple with a growing recession and a severe downturn in the residential and commercial real estate markets and come under increasing pressure to seek government bailout money for lending.

Many US banks are poised to slash their common stock dividends next year. In some cases, dividends could even drop to zero, analysts said.

The pain will likely be widespread. Regional banks Regions Financial Corp and SunTrust Banks Inc are likely to have dividends that exceed their net income next quarter, making dividend cuts almost a certainty, Scott Valentin, analyst at Friedman, Billings, Ramsey, wrote in a research note on Tuesday.

Earlier this month, Fox-Pitt Kelton said a dividend cut was imminent at Marshall & Ilsley, given its out-sized exposure to residential construction and home equity loans.—Reuters