Friday May 15, 02:33 PM
Regulators urge Bank of America board overhaul: report
WASHINGTON (AFP) - US federal regulators have urged Bank of America (NYSE: IKJ - news) to revamp its board of directors with more experienced banking executives, The Wall Street Journal reported Friday.
On May 7, the banking giant's new chairman, Walter Massey, unveiled a committee that would recommend changes to the board, as well as oversee how the bank would respond to federal "stress tests" that showed it needed 33.9 billion dollars in core capital as a buffer in the event of a weaker economy.
But even before Massey made those moves, the financial newspaper said, the Federal Reserve and the Office of the Comptroller of the Currency had "signalled to the bank's leadership that such steps would be well received by the federal government."
According to the Journal, government officials also suggested that independent directors lead a reshuffling of the board, and that the board "needed more members with banking experience."
The new committee is expected "to examine the strength of the team and the issue of CEO succession," said the newspaper, citing a person familiar with the matter. It added that the bank was forced to accept caps on executive pay.
The government is also playing an important role in a shake up of the board of troubled automaker General Motors (NYSE: GM - news) , a company in which it does not own a stake, and at bailed-out insurer American International Group (NYSE: AIG - news) (AIG), according to the financial daily.
Citigroup (NYSE: C - news) , the Journal noted, has named four financial experts to its board as part of a "US-directed overhaul of its directors," following months of pressure on the bank's new chairman Richard Parsons and an agreement under which the government's stake in Citigroup could reach 36 percent.
Bank of America has said it would meet regulator demands following the stress tests by selling assets and other actions to repay the US Treasury.
Chief executive Kenneth Lewis said earlier this month that the company was working on a plan to submit to the government for the contingency due by June 8.
Lewis said the bank will not need any new government money and that the plan will be implemented by the November 9 deadline.
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