BoA repay bail-out loans

BoA payback

After receiving billions of dollars as part of the US government's bailout program at the height of the financial crisis, Bank of America says it is now planning to repay the funds and raise extra capital - a concerted effort that marks a significant turning point for Wall Street.

Bank of America (BoA), who received $45 billion after the purchase of Merrill Lynch, will now make moves to pay back that sum by using $26.2 billion in available cash and by selling $18.8 billion in securities. According to analysts the loan is being paid much earlier than anticipated.

Government restrictions

The reasons behind a speedy payback vary, but one key driver is the desire to free the bank from government restrictions on executive pay, a stipulation that has thus far have had to be adhered to in return for receiving the grants in the first place.

Reports suggest that freeing itself from the tethers of these restrictions will help the bank in its search to find a new chief executive after Ken Lewis retires at the end of the year. It is believed that these restrictions on executive pay have so far been hindrance in attracting talent.

According to Bob Stickler, BoA spokesman, repaying the loan will remove "the stigma that has become to be associated with the company."

He added: "With the loan repaid we will become more attractive to a CEO candidate. Whether that means we get somebody external is impossible to say."

It was in September when Ken Lewis, who had led the company since 2001 and through the economic crisis, would retire from Bank of America at the end of the year. It was later announced that he would receive no salary or bonus for 2009.

Stickler said that a decision on Lewis' successor was expected "in the near future".

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