In order to regain the confidence of its shareholders ,
Bank of America Corporation
) has sought re-approval of 5 cents per share of quarterly
dividend. The news was reported by the Wall Street Journal.
BofA had resubmitted a tapered 2014 capital plan in May, but had
not divulged any details at that time. The resubmission occurred as
a result of its original 2014 capital plan being suspended owing to
the discovery of an accounting error on Apr 28. (Read More:
BofA Tumbles on Suspension of Capital Plan
In Mar 2014, BofA's enhanced capital deployment activities in form
of higher dividend payouts and share repurchase was approved by the
Federal Reserve, for the first time since the financial crisis.
Earlier in 2011, BofA had asked for a hike in quarterly dividend.
However, its plan was rejected as the bank's fundamental strength
was not up to the requirements of Fed.
Since 2011, BofA has strived hard to regain its past glory through
restructuring and streamlining efforts. The company's strong
capital ratios, which are well above the regulatory limits, reflect
The Fed has time till Aug 10, 2014 to decide on the bank's
While BofA resubmitted its revised capital plan, other firms -
) along with the U.S. units of
HSBC Holdings plc
The Royal Bank of Scotland Group plc
) and Banco Santander, S.A. - whose plans were rejected, have got
an extension. The extended deadline for resubmission of the revised
plans as well as 2015 capital plans is Jan 5, 2015.
Hence, if BofA's capital plan is approved, it would surely boost
investors' confidence. Further, it would prove that the company's
efforts to improve efficiency have started bearing fruits.
However, we believe that the road ahead is not easy for BofA. Apart
from its concerns associated with the pre-crisis period, tough
macroeconomic challenges will continue to drag its revenue growth.
Currently, BofA carries a Zacks Rank#3 (Hold).
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