Bank of America (NYSE:BAC) has suspended its planned US$4 billion buyback, and a dividend increase, after discovering an error in its latest capital calculations.

The bank revised its regulatory capital disclosure due to an incorrect adjustment related to the treatment of certain structured notes assumed in the Merrill Lynch & Co., Inc. acquisition. The firm said that the reduction does not impact its financials or shareholders’ equity, which were properly stated.

However, the U.S. Federal Reserve Board is requiring the bank to resubmit its capital plan and to suspend planned increases in capital distributions. Bank of America will be required to resubmit its capital plan within 30 days, which must address the quantitative errors in its regulatory capital calculations.

The Fed had approved planned increases to its dividend and a share buyback. It now has to scuttle those plans until the Fed approves the revised plan, which will likely result in less capital being returned to shareholders.

In the meantime, its Basel III common equity tier 1 capital ratio has been revised down by five basis points to 11.8%; the estimated total capital ratio was revised to 14.8%, down 21 bps; and, the estimated tier 1 leverage ratio was revised to 7.4%, down 12 basis points.

The bank said that it promptly notified the Fed when the mistake was discovered, and that it will engage an outside firm to review its processes and the materials prior to resubmitting its revised capital plans.