Sell Citigroup, Buy Bank of America: Mayo

Well-known banking analyst Mike Mayo told CNBC Thursday he has a buy rating on Bank of America and a sell rating on Citigroup.

Citigroup Building
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Citigroup Building

"Use Citigroup as a source of funds and use that to buy Bank of America," Mayo said, analyst at Credit Agricole.

Earlier this week, in a note to clients, Mayo criticized Citigroup for internal control deficiencies in regards to the bank's 2007 10K filing. He also told CNBC the bank has had 20 "major risk mishaps" in the last decade.

According to Mayo, Bank of America has risk issues, they are less risky compared to Citigroup.

Mayo went on to cite Bank of America's stronger balance sheet given capital raises, asset sales and improving loan quality as reasons for investing in the bank.

"Bank of America — No. 1 — is you don't even need revenue growth for this company to earn to earn $2 dollars a share," he said, "No. 2, half of Bank of America is the old Merrill Lynch with a little bit more capital markets that's a very nice business fix. And No. 3, no question that expectations are low on Bank of America management team, but I think they can exceed what is already pretty low expectations," Mayo added.

Shares of Citigroup closed up 1.74 percent to end at $4.68 a share. Click here for after-hours quote.

Meanwhile, Bank of America ended the trading day up 3.18 percent to close at $14.27 a share. Click here for after-hours quote.