Thursday, November 1, 2012

Bank of America faces 1.5 percent capital buffer

Bank of America could be forced to hold an extra 1.5 percent of top-quality capital as a systemically important financial institution, global regulators announced Thursday. That's significantly less than the 2.5 percent surcharge the bank could have faced.

Essentially, this additional capital buffer is an attempt to provide more of a cushion against losses in the event of another global financial crisis. Regulators have been devising the plan for about a year. The numbers will be revised again next year, and won't begin to phase in until 2016.

JPMorgan Chase and Citigroup are among four global banks facing the top capital charge of 2.5 percent. Some analysts had expected Bank of America to fall in that category.

The bank had not released an estimate for where it thought it would fall, and did not comment on the decision Thursday.

As it stands, Bank of America would already comply with all its new capital requirements. The bank has been shedding assets and business lines over the past several years, and reported a Tier 1 common capital ratio of 8.97 percent at the end of the third quarter.

Wells Fargo could face a 1 percent capital cushion requirement.

Bank of America's stock rose more than 4.5 percent Thursday, to $9.74. It had edged up slightly higher in after-hours trading, as of 5 p.m.