Warren Buffett reportedly wants the Fed's permission to boost Berkshire's stake in Bank of America beyond 10%
- Warren Buffett's Berkshire Hathaway is seeking approval from the Federal Reserve to increase its stake in Bank of America past 10%, Bloomberg reported Tuesday.
- The Omaha, Nebraska-based holding company said it doesn't plan to merge the bank, sell its assets, or make other significant changes to its strategy or leadership, according to Berkshire's application obtained by Bloomberg.
- Berkshire's position in BofA stock is its second-largest equity holding after Apple, and was worth more than $27 billion as of Monday's closing price.
- BofA stock jumped as much as 3.8% on the news. The bank reports its third-quarter earnings figures Wednesday morning.
- Watch Bank of America trade live here.
Warren Buffett is seeking permission from the Federal Reserve to bump Berkshire Hathaway's stake in Bank of America past 10%, Bloomberg reported Tuesday.
The holding company applied for the Fed's approval in recent weeks and made several statements in the document assuring that it won't take active control of the bank. Buffett's company noted that it doesn't plan to merge BofA, sell its assets, or make significant changes to its strategy or leadership, according to Bloomberg.
The 10% ownership threshold for banks serves as an informal level that often prompts regulatory review. US officials often review relationships between banks and shareholders in which a large position could be used to influence lending activities.
The Omaha, Nebraska-based company didn't specify in the application how many more shares it would purchase if given the green light to do so.
Berkshire "may decide to purchase additional shares of common stock of Bank of America based on its evaluation of the investment opportunity presented by such purchases," the company wrote in the application obtained by Bloomberg.
Bank of America shares climbed as much as 3.8% on the news. The firm is scheduled to announce its third-quarter earnings figures Wednesday morning.
Berkshire hit the 10% limit in July after BofA's share repurchase program boosted the holding company's stake. A similar event occurred with the holding company's stake in Wells Fargo in 2016, and Berkshire promptly sold shares to remain under the 10% threshold.
As of July 25, Berkshire's position in BofA comprises more than 950 million shares. The holding was valued at more than $27 billion as of Monday's closing price. Berkshire's BofA stake is its second largest equity holding after Apple.
"We have appreciated Berkshire's ownership for the past seven-plus years," BofA told Bloomberg in a statement. "Through our success, Berkshire and other long-term shareholders have benefited. We look forward to Berkshire's support as we continue to drive responsible growth at Bank of America."
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