Fitch: BAC's Ratings Unaffected by Dividend & Share Repurchase Suspension

Mon Apr 28, 2014 1:19pm EDT

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(The following statement was released by the rating agency) CHICAGO, April 28 (Fitch) Bank of America Corporation (BAC) announced today that it uncovered an error in the estimate of its regulatory capital calculations, and as a result regulators are requiring it to suspend its planned capital distributions. Fitch Ratings does not expect that BAC's ratings, currently at 'A/F1' with a Negative Rating Outlook, will be impacted by this issue. Details of the error related to an incorrect treatment of a maturing structured note liability related to the 2009 acquisition of Merrill Lynch that led to a nearly 30 basis point overstatement of the company's Basel III fully phased-in Tier 1 common (CET1) ratio under both the standardized and advanced approach. BAC's revised Basel III CET1 ratio under the standardized approach was 9.0%, and under the advanced approach was 9.6% as of March 31, 2014. Fitch notes that BAC's capital ratios prior to the restatement were below the average CET1 ratio of some peers, and this revision very modestly increases the gap. The Federal Reserve has required BAC to resubmit its capital plan and suspend any planned capital distributions including those that were approved during the 2014 CCAR exercise completed last month. Fitch believes that the suspension of capital distributions should allow BAC to rebuild its capital ratios to its previously stated levels over a reasonable time horizon; however, the company's potential distributions over the balance of the year may be materially impacted. Fitch also believes that the company may run at larger capital buffers given some of the procedural difficulties highlighted by this issue. Contact: Justin Fuller, CFA Senior Director +1-312-368-2057 Fitch Ratings, Inc. 70 West Madison Street Chicago, IL 60602 Julie Solar Senior Director +1-312-368-5472 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available on 'www.fitchratings.com'. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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