May 3 (Bloomberg) -- Warren Buffett, who made a $5 billion investment in Bank of America Corp., said he’s confident the lender will overcome an accounting mistake that forced the firm to suspend its capital plan this week.
“That error they made does not bother me,” Buffett said. “You do the best you can.”
Bank of America halted a planned dividend increase and $4 billion of share repurchases on April 28 after finding the mistake in a stress-test submission to the Federal Reserve. The Charlotte, North Carolina-based bank’s error, which had gone undetected since 2009, didn’t affect earnings.
“It doesn’t change my feeling about Bank of America or its management,” Buffett said today at Berkshire’s annual meeting in Omaha, Nebraska.
Buffett’s Berkshire Hathaway Inc. made the $5 billion investment in Bank of America in 2011, receiving preferred stock and warrants to buy 700 million shares for $7.14 apiece. That effectively makes the bank Berkshire’s fifth-largest equity position, “and one we value highly,” Buffett wrote in his annual letter to shareholders.
The bank, the No. 2 U.S. lender by assets, said its revised submission to the Fed will probably mean lower payouts, without giving the figures.
Buffett’s paper profit on the Bank of America warrants stands at about $5.7 billion. The lender slumped 6.3 percent after the disclosure about the botched accounting, erasing its gain for the year. The firm led by Chief Executive Officer Brian T. Moynihan ended the week at $15.25, 2.1 percent lower than the close on Dec. 31.
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