Bank of America (BAC), which last month won approval to lift its dividend for the first time since the financial crisis, said it will suspend that increase and $4 billion of planned buybacks because of an error in its capital planning.

Bank of America will resubmit its proposal to the Federal Reserve, the Charlotte, N.C.-based lender said Monday. The company said it incorrectly adjusted for cumulative realized losses on structured notes issued by Merrill Lynch.

Chief Executive Brian Moynihan had planned on boosting the bank's quarterly payout to 5 cents a share from 1 cent, five years after the firm cut the dividend to a token amount during the financial crisis. Bank of America said Monday its revised proposal will probably feature lower payouts than in its original plan.

The estimated Tier 1 capital ratio is actually 11.9 percent as of March 31, which is 21 basis points below what the company previously reported, according to Monday's statement. The Tier 1 leverage ratio was 7.4 percent, or 12 basis points lower. A basis point is 0.01 percentage point.

Bank of America must resubmit a capital plan within 30 days and undertake a review to ensure no other errors, the Fed said Monday in a separate statement.

Bank of America declined 2.4 percent to $15.57 at 8:45 a.m. in early trading in New York.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.