Fed does not object to Bank of America capital plan

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The U.S. Federal Reserve said on Wednesday it had approved a resubmitted capital plan from Bank of America, part of an annual stress test of banks' financial robustness.

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In April, the Fed required Bank of America to resubmit its capital plan and to suspend planned increases in capital distributions after the bank disclosed it had incorrectly reported data used in its calculations. The bank withdrew its previously planned increase in April after it found errors that reduced a key capital level by $4 billion.

Bank of America said it would increase its quarterly dividend to 5 cents per share from 1 cent per share, its first dividend hike in seven years.

Raising the dividend has been a top priority for Chief Executive Brian Moynihan. Prior to the 2008 financial crisis, the bank paid a quarterly dividend of as much as 64 cents per share.

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Bank of America's shares rose as much as 2 percent to $15.30 in early trading on Wednesday. Up to Tuesday's close, the stock had fallen about 2.5 percent this year. (Click here for the latest quote.)

By Reuters