Bank of America’s shares dive as it suspends share buybacks
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.