Fed Requires Bank of America to Resubmit Capital Plan

The Federal is requiring Bank of America to resubmit its capital plan for the Fed’s Comprehensive Capital Analysis and Review (CCAR), after the bank disclosed that it reported incorrect capital ratios which were used to conduct the Fed’s stress tests.
By Jake Safane(2147484770)
The Federal is requiring Bank of America to resubmit its capital plan for the Fed’s Comprehensive Capital Analysis and Review (CCAR), after the bank disclosed that it reported incorrect capital ratios which were used to conduct the Fed’s stress tests.

Bank of America revised these capital amounts downward due to an incorrect adjustment related to the treatment of certain structured notes assumed in the 2009 Merrill Lynch acquisition. So for the first quarter of 2014, the estimated Basel III standardized transition common equity tier 1 capital ratio was revised down by five basis points to 11.8%. The estimated tier 1 capital ratio was revised down by 21 basis points to 11.9%. The estimated total capital ratio was also revised down by 21 basis points to 14.8% down 21 basis points, and the estimated tier 1 leverage ratio was revised down by 12 basis points to 7.4%.

Unless extended by the Fed, Bank of America has 30 days from the date notified by the central bank to resubmit their plan. Until the Fed approves the new plan, Bank of America can not increase its capital distributions, including those previously approved as part of last month’s CCAR.

The Federal Reserve can require a banking organization that is part of the annual Comprehensive Capital Analysis and Review (CCAR) program to resubmit its capital plan at any time if there is a material change that could potentially lead to an alteration in a firm’s capital position. Bank of America will be required to resubmit its capital plan within 30 days, unless that time is extended by the Federal Reserve. Bank of America must address the quantitative errors in its regulatory capital calculations as part of the resubmission and must undertake a review of its regulatory capital reporting to help ensure there are no further errors.

Until receiving notice that the Federal Reserve has not objected to the new capital plan, Bank of America will not be able to increase its capital distributions, including those increases approved during the 2014 CCAR exercise last month.

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