Bank of America Corp., the biggest U.S. lender, said Warren Buffett's Berkshire Hathaway Inc. will invest $5 billion to bolster the company after losses tied to subprime mortgages drained capital. Bank of America led a rally of U.S. lenders in New York trading.

The lender will sell cumulative perpetual preferred stock to Berkshire, the Charlotte, North Carolina-based bank said today in a statement. The preferred stock pays an annual dividend of 6 percent, and Omaha, Nebraska-based Berkshire gets warrants to buy 700 million shares at about $7.14 each.

Bank of America lost almost half its value on the New York Stock Exchange through yesterday as investors speculated the lender would have to access the public markets to raise capital. Chief Executive Officer Brian T. Moynihan, 51, has said the company won't need to issue shares to comply with new international capital standards and to settle claims surrounding defective mortgages.