WILMINGTON, Del., April 28 (UPI) -- Bank of America has had to halt its proposed stock buy back and dividend increase because of a math error in its stress test submission to the Federal Reserve.
The bank will have to hold off its proposed plans after it discovered an error in the way it calculated its capital levels. It will now have to resubmit its stress test numbers within 30 days before going ahead with any other proposed actions.
“Bank of America is by far not the first big bank to make a mistake in its CCAR submission,” David Hilder, an analyst at Drexel Hamilton in New York, told Bloomberg.
The Fed had approved on March 26 Bank of America's request to increase its dividend from a penny a common share to five cents and to buy back $4 billion in shares. But with the errors in its reporting, the bank would have to lower its request.
The error means the bank has less high-quality capital than it previously reported, although it still has enough to meet regulatory requirements. Bank of America said the error had no impact on its recently announced earnings.
Bank of America noticed the error last week while preparing its Q10 quarterly regulatory filing and immediately notified the Fed. The error had reportedly gone undetected since Bank of America's acquisition of Merrill Lynch in 2009, a person close to the matter told Bloomberg on condition of anonymity.
This mistake is another setback for the bank and CEO Brian T. Moynihan, who have been dealing with regulatory issues stemming from the acquisitions of Merrill Lynch and mortgage-lender Countrywide Financial Corp. during the financial crisis.