Thursday, October 30th8.7°C
23696
23823

Error forces Bank of America to suspend plans to raise dividend, buy back stock

NEW YORK, N.Y. - Bank of America is suspending a long-awaited dividend increase and stock buyback program after the bank discovered an error in a financial report it gave to the Federal Reserve.

The bank said in statement Monday that the error was related to how it valued securities obtained in its acquisition of Merrill Lynch during the financial crisis in 2009.

As a result, the bank slightly overstated the amount of capital it held and other financial ratios it reported last month as part of its earnings release and its annual financial checkup with the Federal Reserve, the bank's regulator.

Those ratios are a crucial measure of a bank's health and help investors and regulators determine how much of a financial cushion it has to help it survive another financial crisis.

The error didn't affect BofA's earnings, according to the bank's statement.

The news hit the bank's stock in early trading Monday. BofA slumped 69 cents, or 4.4 per cent, to $15.26.

The Charlotte, N.C.-based bank, said it has already notified the Federal Reserve about the needed revisions. It was only last month that the Fed cleared BofA's proposal to raise its dividend for the first time since the financial crisis when the bank passed its "stress test," an annual check-up the Fed conducts on the country's biggest financial institutions.

BofA planned to buy $4 billion of its own stock and raise its dividend from a penny per share to 5 cents per share

The decision to scuttle that plan came about at the Fed's request, according to the bank's statement.

Bank of America said it will submit a new application to the Federal Reserve to increase its dividend and buy back its own stock. The bank warned that its plans for returning capital to shareholders will likely be smaller than previously planned.

The Fed oversees banks' plans for managing their capital to make sure they have enough money in reserve to keep loans flowing even in during an economic downturn. The Fed has conducted annual tests of the largest U.S. banks every year since 2009, the year after the financial crisis plunged the country into the worst economic downturn since the Great Depression of the 1930s.

The Canadian Press


Read more Business News

23901


Recent Trending




Today's Market
S&P TSX14458.69-68.88
S&P CDNX771.65-9.42
DJIA17195.42221.11
Nasdaq4566.138+16.912
S&P 5001994.65+12.35
CDN Dollar0.8923-0.0011
Gold1193.40-5.20
Oil80.63-0.27
Lumber322.40-1.20
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.11+0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.150.00
Cantex0.045-0.015
Anavex Life Sciences0.1711-0.0089
Metalex Ventures0.0350.00
Russel Metals32.22-0.35
Copper Mountain Mining1.97-0.05
Colorado Resources0.14+0.005
ReliaBrand Inc0.012-0.004
Sunrise Resources Ltd0.05+0.025
Mission Ready Services0.375+0.005

 



22831

FEATURED Property
18315585351 Ptarmigan Street, Kelowna, BC
5 bedrooms 4 baths
$684,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


22771