Investors aren’t happy. The stock slid as much as 6% today as Bank of America had wanted to buy back $4 billion in stock and increase the dividend to 5 cents a share from 1 cent.
The calculation error led to a small decline of 5 basis points in the bank’s estimated Tier 1 common equity ratio to 11.8% as of March 31. Bank of America also said its estimated total capital ratio had declined by 21 basis points to 14.8, and that its Tier 1 leverage ratio was down 12 basis points to 7.4%.
Even with the revised ratios, the bank remains “well-capitalized” under regulatory guidelines. Still, the Fed has ordered it to “resubmit its data templates and requested capital actions contained in the 2014 Comprehensive Capital Analysis and Review (CCAR).”
CCAR is the second part of the Fed’s annual stress-test process, when the regulator decides whether to approve large banks’ deployment of capital through dividends, share buybacks or acquisitions. Bank of America is retaining a third party to review its capital-planning process, possibly opening up another can of worms.
Bank of America said it expected its capital deployment this year to be “less than previously proposed.”
But the Fed could decide to reject Bank of America’s revised capital plan outright.