The Bank of America reveals plans to pay back its government loan.

The Bank of America said it will repay the £45 billion loan it received from the US government, which it received as a bailout at the peak of the economic crisis.

The loan was given to America’s biggest bank under the Troubled Asset Relief Program (TARP) and to date it has paid $2.54bn in dividends to the US Treasury. The bank says that by repaying its debt early it will save approximately $3.6bn in annual dividend costs.

CEO and President, Ken Lewis, said: “We appreciate the critical role that the US government played last fall in helping to stabilise financial markets, and we are pleased to be able to fully repay the investment, with interest.”

Mr Lewis added: “We believe that this [repayment] is good news, not only for the US taxpayer and our company, but for the country as it is a milestone indicating that public policy has succeeded in helping our industry and the economy begin to recover.”

It will repay the loan using $26.2bn in excess liquidity and $18.8bn in proceeds from the sale of “common equivalent securities”.

Mr Lewis is due to retire at the end of the year, and by repaying the loan it will also remove government restrictions imposed on executive pay, which has reportedly been hampering the bank’s search for a successor.

In October the Bank of America reported a $1bn (£612m) net loss for the third quarter, much worse than analysts had expected.