New capital rules from Basel III will require banks to hold more capital than necessary, cutting in to shareholder benefits like dividends and share buybacks, Bank of America chief executive Brian Moynihan said today.
The Basel regulations will essentially require banks to double their capital levels over the next few years. To comply, Bank of America will have to invest the extra capital in low-risk portfolios like Treasuries, "so it won't be put to good use," Moynihan said
But Moynihan, delivering the keynote address at the annual Bank of America Merrill Lynch financial services conference in New York, also said that the banking industry "needs to become a simpler place" or it will face even more regulations.
Moynihan said it has been difficult for the bank and its shareholders to keep up with new regulations "as they've changed, and changed again, and changed again." Shares are trading at around $12, down from about $16 at the beginning of the year, and the bank hasn't given a clear answer for when it might restore the dividend.