Saturday, October 10th9.9°C

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 TSX13964.36-14.30
S&P CDNX552.26+5.20
S&P 5002014.89+1.46
CDN Dollar0.7723-0.0001
Natural Gas2.52+0.02

Okanagan Companies
Pacific Safety0.225-0.005
QHR Technologies Inc1.25+0.02
Metalex Ventures0.07+0.02
Russel Metals21.26-0.29
Copper Mountain Mining0.66+0.05
Colorado Resources0.07+0.00
ReliaBrand Inc0.0175+0.0009
Sunrise Resources Ltd0.02+0.00
Mission Ready Services0.075-0.005
Decisive Dividend Corp3.25+0.14
Diamcor Mining0.97+0.03


2276913211 - 250 Hollywood Road
2 bedrooms 2 baths
more details
Click here to feature your property
Please wait... loading

Income for life?

Photo: Thinkstock.comIn almost every conversation I have with clients these days, the topic swings to interest rates. What direction they’re going, how long will they stay where they are and how...

Perfect (reno'd) home

Photo: Thinkstock.comHow many times have you found a home in the perfect location, but it needs too much work as per the home inspection? There is a great program available through most lenders that w...

5 Claim misconceptions

Photo: Thinkstock.comIf you have been hurt in an accident or as a result of medical negligence you will likely look to your friends and family for some advice on how to deal with the situation. These ...



Member of BC Press Council