(Corrects date in paragraph 7 to Sept. 14 from Sept. 15)
April 28 Bank of America Corp said it
would suspend its $4 billion stock buyback program and a planned
increase in its quarterly dividend because it miscalculated the
level of its capital after buying Merrill Lynch in 2009.
The restatement means that the bank holds less capital than
Bank of America, whose shares were down 5 percent in early
trading on Monday, was ordered by the Federal Reserve to suspend
and resubmit its capital plans for 2014.
The Fed said the bank must address the errors in its
regulatory capital calculations and ensure there were no further
problems with its reporting. (link.reuters.com/zef88v)
After annual "stress tests" of U.S. banks in March, the Fed
ordered Bank of America to scale back its original capital plan
because it would have left it with inadequate capital in the
event of a crisis. (link.reuters.com/byf88v)
Bank of America said the miscalculation was related to the
treatment of structured notes after the purchase of Merrill
Lynch at the height of the financial crisis.
The bank agreed to buy Merrill Lynch for about $50 billion
on Sept. 14, 2008 - the day before Lehman Brothers Holdings Inc
went bankrupt - in a hurried deal that won praise for former CEO
Ken Lewis at the time and probably prevented Merrill's demise.
The bank said it discovered the miscalculation after it
released its first-quarter results on April 16. BofA is required
to resubmit its capital plan within 30 days.
The reduction in regulatory capital and ratios will have no
impact on the company's historical consolidated financial
statements or shareholders' equity, BofA said.
Bank of America shares were at $15.23 in early trading on
the New York Stock Exchange. Up to Friday's close, the stock had
barely budged since the start of the year. The KBW bank index
slipped about 1.7 percent in the same period.
(Reporting by Tanya Agrawal in Bangalore; Editing by Don
Sebastian and Ted Kerr)