Bank of America (BAC) may soon bring some $150bn of off-balance-sheet assets back onto its balance in Q110 with the implementation of a new accounting rule, FAS 167, potentially pressuring its capital reserves. Of the assets the bank says it may bring to its balance sheet, home equity conduits account for an estimated $12bn, while card securitizations account for $85bn, and other variable interest entities make up the remaining $53bn, according to an equity research note by Keefe, Bruyette & Woods' (KBW) Jefferson Harralson. "BAC will need to reserve for the lion's share of these loans, but according to BAC, the accounting standards dictate that the reserving will come in the form of a capital adjustment rather than through the P/L (profit and loss)," Harralson noted in the research piece. Based on an estimated 11% annualized loss rate on the card book and 4% for the remaining loans coming onto the balance sheet, KBW estimates a capital adjustment of $7.9bn, or $0.91 per share, is needed. The firm said this estimate could be conservative if the Financial Accounting Standards Board (FASB) phases in the reserve requirements over time with the implementation of FAS 167 and if the reserve methodologies use less-than-peak expected loss rates. Financial Accounting Standards (FAS) Statement 167 pertains to securitizations and special purpose entities, according to FASB. "Statement 167 will require a company to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement," the Board said in a recent statement. "A company will be required to disclose how its involvement with a variable interest entity affects the company’s financial statements." Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published.