Bank of America (BAC) is the latest bank to announce that it will redeem its trust-preferred securities in advance of new capital requirements that will start being phased in at the beginning of 2013.
The Charlotte company said Friday that it will redeem the $3.9 billion in trust-preferred securities using excess capital. The redemption will include accrued and unpaid distributions.
Under a new provision of the Dodd-Frank Act, banks with at least $15 billion of assets at Dec. 31, 2009 will no longer be able to count trust-preferred securities toward their Tier 1 capital. Three regional banks said earlier this week that they would redeem their trust-preferred securities in the coming weeks and it is expected that many more banks will follow suit over the next several months.
Bank of America said it should complete its repurchase in late July.