BANK of America Merrill Lynch suspended its plans to buy back shares and hike its dividend yesterday, after it found it had mis-calculated its capital position.
The bank mis-counted the value of structured notes issued by Merrill Lynch before the financial crisis and the firm’s subsequent merger.
The mistake overstated its capital position by roughly $4bn (£2.4bn).
BAML had planned to return money to investors with a $4bn buyback and a rise in the quarterly dividend, a plan that would in total have given investors a $5.3bn boost.
That process is now on hold while the bank re-calculates its capital position.
Once that is complete, BAML can go ahead with the dividend hike and buyback, at a lower level than initially planned.
The bank’s shares dived 6.3 per cent after the announcement.