BofA board 'should be eliminated'

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Dick Bove, the vice president of equity research at Rafferty Capital Markets, has heaped pressure on Bank of America.

Pension funds and shareholder advisory firms have criticized a decision last year to overturn company policy and make Brian Moynihan the chairman of the bank as well as its CEO. A vote that could strip Moynihan of the chairman's title has been set for September 22, but Bove told CNBC that the whole issue is merely a "tempest in a teacup."

"I think it's ridiculous that we're going through this," he told CNBC Tuesday, taking aim at the board itself.

"It should be a vote on the board, the board should be eliminated for putting the shareholder in this position."

Proxy advisory firm ISS (Institutional Shareholder Services) on Friday joined Glass Lewis in recommending shareholders strip Moynihan of the chairman's role. Critics have argued that a number of conflicts of interest arise when one person holds both titles.

In a statement last week, Bank of America's board said that having the "same flexibility on board leadership that 97 percent of the S&P 500 now have, while still providing strong independent oversight, is still in the best interest of stockholders."

Bove explained that this is the only company on the S&P 500 where the dual role is a problem and highlighted that there had been no academic studies to prove that split roles can either be an attribute or a hindrance.

"It is absolutely absurd," Bove continued. He added that he continued to remain bullish on a company that he believes has managed to turn round its fortunes since the start of the global financial crisis.

"Bank of America is in position to show enormous gains in price over the next 12 to 18 months," he said.

BofA's tier one capital ratio—the amount of capital it keeps compared to assets weighted by the risk they carry and a key indicator of a bank's ability to withstand economic shocks —is 12.5 percent, which is only slightly lower than JPMorgan Chase's 12.8 percent and equal to Citigroup. It trades at 0.8 times book value, which is actually a slight discount to Citi's 0.9 times and JPM's 1.2 times, according to S&P Capital IQ.

BofA shares have faced a rocky few weeks, not just because of the wider market turmoil spreading from China. The stock is now down 12.5 percent year-to-date and has underperformed the S&P 500.

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