By Dow Jones Business News, September 16, 2013, 02:36:00 PM EDT
By Saabira Chaudhuri
Bank of America Corp. ( BAC ) on Monday released new data projecting a key measure of capital strength would be higher
under a hypothetical economic downturn, than it projected earlier this year.
Under the results of its mid-year stress test, the investment bank said its minimum threshold for the measure of
financial health--known as a Tier 1 common ratio--would fall to 8.4%, up from its March projection of 7.7%.
Also on Monday, Bank of America projected a pre-tax loss of $26.1 billion under a severely adverse scenario, versus
its March projection of a $43.8 billion loss.
Like Citigroup Inc. ( C ), Goldman Sachs Group (GS) and others, Bank of America released the updated figures Monday as
part of a requirement of the Dodd-Frank Act, which calls on large bank-holding companies to conduct their own so-called
stress tests to help gauge their financial strength.
Eighteen banks released results under an initial round of Dodd-Frank stress tests in March and were required to
conduct a mid-year version of the tests, the results of which they are required to release between Sept. 15 and Sept.
The tests are separate from the Federal Reserve's Comprehensive Capital Analysis and Review stress tests but also
measure a bank's financial health. The CCAR results were also released in March. At that time the Fed had said it
expected Bank of America's Tier 1 common ratio under a stressed scenario would be 6.8%.
Monday's disclosure comes after Bank of America's Chief Financial Officer Bruce Thompson said last week the bank is in
a better position for the 2014 Federal Reserve stress test than it was coming into this year's test.
The second-largest U.S. bank by assets received regulatory approval to buy back $5 billion in shares in 2013 following
the Fed's round of stress tests. But the bank has not asked regulators for a dividend increase since a 2011 request was
rejected by the Fed. Bank of America is required to obtain such approvals from the Fed to be sure the bank has an
adequate capital cushion.
In July, Bank of America reported its second-quarter profit jumped 63%, beating analyst estimates, as the bank's
results were boosted by strong income from its global markets arm and improved credit quality, although it was hit by
greater losses in its mortgage-banking unit.
Shares of Bank of America were up 0.9% at $14.61 in recent trading. The stock has risen more than 25% this year.
Andrew R. Johnson contributed to this article.
Write to Saabira Chaudhuri at firstname.lastname@example.org
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