Bank of America is freezing plans to buy back stock and boost its dividend after it miscalculated key capital ratios for regulators.
The nation’s second-largest bank announced Monday that the Federal Reserve had asked it to halt the investor rewards after the bank discovered an “incorrect adjustment” to some of its capital figures. When the numbers were recalculated, the bank ended up with less of a capital cushion than it previously thought.
{mosads}After the bank told the Fed about the error, the regulator ordered it to resubmit its capital plans so it could review the correct numbers. In March, the Fed said Bank of America had passed its annual “stress test” under the incorrect numbers, in which banks’ books are tested against a range of dire economic circumstances to ensure they can withstand the blow.
The Fed said Monday that Bank of America must resubmit its numbers and review how it collects and reports capital data to ensure there are no future errors. Until the Fed signs off on the capital plan with the new figures, the bank is barred from implementing stock buybacks or higher dividends.
The Fed approved capital plans for 25 banks, including Bank of America, in March, while rejecting the plans of five others.