Bank of America to repay TARP

People walk past a Bank of America branch in New York August 13, 2009.

NEW YORK (Reuters) - Bank of America Corp has reached an agreement with the U.S. government to repay its $45 billion of bailout funds in the next few days, the company said on Wednesday.

The Charlotte, North Carolina-based banking giant is expected to sign the documents repaying its Troubled Asset Relief Program funds over the next few days.

A U.S. Treasury official called the repayment a step in the right direction, adding that replacing Treasury investments with private capital would provide a boost to confidence.

The announcement comes as the bank has bristled under the U.S. pay czar Kenneth Feinberg's curbs on compensation for senior management and repeatedly expressed a desire to repay the funds as soon as possible.

Under the agreement's terms, the bank would use the proceeds from the sale of $18.8 billion of "common equivalent securities." The remainder would be repaid through $26.2 billion of cash.

The bank is repurchasing all of its shares outstanding under the TARP program but not repurchasing the warrants.

The deal was negotiated by Chief Risk Officer Greg Curl, according to press reports. Curl has been mentioned as a contender to replace retiring Chief Executive Ken Lewis.

Analysts said the negotiations would be a positive for Curl in his contention for the top job.

"It's a feather in his cap," said Anton Schutz, president of Mendon Capital in Rochester, New York.

A bank spokesman was not immediately available for comment.

The move comes as the bank has struggled in its ongoing CEO search to find a replacement for Lewis.

Analysts and bank observers have said the struggle stemmed in part from the $45 billion of government aid extended to the bank. The U.S. pay czar curbed the pay for top executives and introduced other restrictions.

Lewis, retiring at year's end, has repeatedly said his goal was to repay the funds before he left the company.

The bank's shares rose 2.2 percent to $16 in after-hours trade.

(Reporting by Joe Rauch; Editing by Matthew Lewis and Steve Orlofsky)