Bank of America inches towards independence
BANK of America (BoA) is understood to be edging closer to freeing itself of government restrictions on pay by returning some of the $45bn (£28bn) in bailout money it received from the state last year.
The bank, which was forced to take state aid despite insisting that it did not need to do so, is thought to be ready to pay back $20bn of its Troubled Asset Relief Programme (Tarp) money.
Repayment of the funds would see the bank removed from the list of banks in receipt of “exceptional” aid.
The categorisation has seen its pay plans subject to review by President Obama’s new pay tsar Kenneth Feinberg, with its 2009 compensation proposals still awaiting approval.
BoA, led by chief executive Kenneth Lewis, also hopes to escape a separate deal under which the state would help absorb losses on assets owned by BoA and Merrill Lynch.
The bank was due to cover the first $10bn in losses, with the US government picking up 90 per cent of the remainder in exchange for $4bn in preferred stock paying an 8 per cent dividend worth about $320m.
Regulators want the bank to pay $500m to exit the scheme.