Bank of America (BofA) may be forced to pay certain cash bonuses in stock unless it raises more capital before the end of the year, a news report has revealed.
According to Bloomberg, the financial services provider needs to sign contracts for sales as part of a bid to raise $3 billion worth of assets before December 31st.
The firm is tied to an agreement with the government which stipulates it needs to repay funds utilised during the credit crisis as part of the Troubled Asset Relief Program.
BofA has so far raised $1.9 billion but if it fails to reach the $3 billion target, stock may be issued to its employee-base in order to make up the gap.
Mark Borges, a compensation consultant at Compensia Inc. in Corte Madera, California, told the news provider: “They are going to meet their commitment and if they have to, they’ll do it through their employees.
“Given the size of the compensation pool, they may be able to meet the entire requirement by selling stock to insiders rather than outsiders.”
BofA recently announced plans to sell 34.5 million shares in BlackRock as part of a secondary sale.
By Jim Ottewill
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