Bank of America Corp. announced late Wednesday it will repay the entire $45 billion it has received in aid from taxpayers.

The surprise payment will clear the way for the bank to rid itself of the government’s heavy hand in its affairs since accepting the money as part of the U.S. Treasury’s Troubled Asset Relief Program beginning last fall. There’s also speculation that the move opens the door for BofA to hire a new chief executive in the near future.

“This is a clear sign from the government that it recognizes TARP is an impediment to Bank of America finding a new CEO,” says University of North Carolina at Charlotte finance professor Tony Plath. He expects the repayment decision will be followed by a CEO announcement in the next few days.

BofA chief executive Ken Lewis plans to retire December 31. The bank has struggled to find a suitable replacement, and several reports have indicated some candidates wouldn’t be interested unless the bank escaped government oversight associated with the taxpayer loans.

“We appreciate the critical role that the U.S. government played last fall in helping to stabilize financial markets, and we are pleased to be able to fully repay the investment with interest,” Lewis said in a statement Wednesday afternoon. “As America’s largest bank, we have a responsibility to make good on the taxpayers’ investment, and our record shows that we have been able to fulfill that commitment while continuing to lend. We believe that this is good news, not only for the U.S. 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.”

BofA entered the TARP program last fall when the government awarded banks extra capital to help prop up the financial markets. BofA inherited more government loans in January when it closed a deal to purchase Merrill Lynch & Co. It also received an additional $20 billion from the government to help close that deal as Merrill’s losses ballooned in last year’s fourth quarter. Altogether, BofA accepted $45 billion in taxpayer aid.

The TARP money opened the bank to increased scrutiny, as the government became one of the bank’s biggest shareholders. Limits on bonuses and employee pay were slapped on the bank this year because it was one of seven companies that received “exceptional assistance” from the government.

To date, BofA has paid $2.54 billion in dividends to the U.S. Treasury on the TARP investment. Repaying TARP will save the company approximately $3.6 billion in annual dividend costs from TARP, the bank says.

Charlotte-based BofA will repay TARP by repurchasing all the preferred stock owned by the government. Repurchase of TARP preferred stock is expected to reduce income available to common shareholders in the fourth quarter by $4.1 billion.

The bank expects to repay the money with $26.2 billion in excess liquidity and $18.8 billion in proceeds from the sale of “common equivalent securities” that would be converted to common stock with shareholder approval. In addition, BofA will increase equity by $4 billion through asset sales to be approved by the Federal Reserve.

BofA also will raise up to $1.7 billion through the issuance of restricted stock in lieu of a portion of incentive cash compensation to some employees as part of their normal year-end bonus payments.

After the TARP repayment and the related capital raises, the company’s Tier 1 capital ratio would be 11 percent. The Tier 1 Common capital ratio would be 8.5 percent. Both ratios would meet the government’s standard for considering a bank well capitalized.