Tuesday, July 7th26.1°C
25936
22748

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




Recent Trending




Today's Market
S&P TSX14550.34-43.23
S&P CDNX650.72-12.61
DJIA17639.62-43.96
Nasdaq4967.10-24.84
S&P 5002068.54-0.22
CDN Dollar0.7844-0.0062
Gold1153.70-19.20
Oil52.74-0.39
Lumber280.90-2.80
Natural Gas2.71-0.05

 
Okanagan Companies
Pacific Safety0.175+0.005
Knighthawk0.010.00
QHR Technologies Inc1.50-0.02
Cantex0.05+0.02
Anavex Life Sciences0.4989-0.0211
Metalex Ventures0.065-0.010
Russel Metals22.48+0.09
Copper Mountain Mining1.05-0.04
Colorado Resources0.08-0.01
ReliaBrand Inc0.006+0.000
Sunrise Resources Ltd0.025-0.010
Mission Ready Services0.165+0.005
Decisive Dividend Corporation3.00+0.00

 



26755

FEATURED Property
19439131680 Peacock Road
$269,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Increase property value

Photo: Thinkstock.comHere are five of the best renovations you can do to your home to increase property value. These five renovations can sometimes have a return on investment five to six times what t...


Active listening

Has this ever happened to you? You had an initial meeting with a prospect. You asked that prospect what seemed to be all the right questions. You had what felt to you like a good conversation, and bas...


The price of money

Money is not a commodity. By definition, a commodity is a generic product that is bought and sold on price alone. Money, Canadian bills for example, look the same, smell somewhat the same, and are ava...

_








Member of BC Press Council


26906