May 27, 2014 8:53 pm

BofA resubmits capital plans to Fed

A customer uses a Bank of America ATM in downtown Charlotte, NC©AP

Bank of America said it had resubmitted its proposed capital plans to the Federal Reserve after an accounting error forced it to suspend and revise its plan for a $4bn share buyback and its first increase in dividends since 2007.

“The requested capital actions contained in the resubmission are less than the 2014 capital actions to which the Federal Reserve previously did not object,” the bank said in a regulatory filing on Tuesday.

BofA did not disclose details of its reworked capital plans but analysts including Betsy Graseck at Morgan Stanley expected the bank to cancel its share buyback but maintain its higher quarterly dividend request.

The original submission – part of the Fed’s annual stress tests of the US banking system – was withdrawn after an accounting error over the treatment of certain structured notes led BofA to overstate its capital by $4bn.

BofA discovered the issue as it prepared its regular earnings disclosures; and changes to the wording of the Fed’s instructions over capital treatment, under the Basel III capital rules, later helped make clear that the bank had erred, a person familiar with the process said.

BofA said its third-party review had been completed and that the results had prompted a reduction of less than one basis point in the bank’s regulatory capital ratios before the end of the third quarter.

Fed officials now have 75 days to review the fresh submission.

Citigroup, which failed the Fed’s stress tests in March on a “qualitative” basis, has said it will not resubmit its capital plans this year.

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