Tags: Bank of America | Legal | Costs | Profit

Bank of America: Legal Costs Erase Reported Profit

Thursday, 06 Nov 2014 06:43 PM

Bank of America Corp. cut third-quarter earnings by $400 million, wiping out the surprise profit it reported last month, on higher litigation costs tied to probes of the firm’s foreign-exchange business.

The lender posted a loss of $232 million, or 4 cents a share, for the three months ended Sept. 30, it said Thursday in a statement. U.S. regulators, in documents sent to the bank late last month, faulted systems and controls in Bank of America’s currency-trading business and called for fines and remedial actions, the firm said in a separate filing.

“The company has been engaged in separate advanced discussions with certain U.S. banking regulatory agencies to resolve matters related to its foreign-exchange business,” Bank of America said in the statement.

Chief Executive Officer Brian T. Moynihan, 55, has presided over five quarterly losses since taking the top job in 2010. He’s contending with another legal headache after agreeing to a record $16.7 billion settlement of U.S. government mortgage probes in August.

Citigroup Inc. revealed last week that it’s facing a criminal probe into its foreign-exchange operations, paring third-quarter profit by $600 million. JPMorgan Chase & Co. and Zurich-based UBS AG also have disclosed criminal inquiries by the U.S. Justice Department into those businesses. Authorities on three continents are examining whether traders at the biggest banks sought to profit by rigging currency rates.

OCC, Fed

Bank of America is in settlement discussions with the Office of the Comptroller of the Currency and Federal Reserve, said a person briefed on the talks, who requested anonymity because the negotiations are private. The discussions accelerated after the bank disclosed quarterly results in October, according to Thursday’s statement.

Bank of America, the second-largest U.S. lender, previously said it had $5.6 billion in third-quarter legal expenses, according to an Oct. 15 presentation, with almost 90 percent attributed to the mortgage settlement. The Charlotte, North Carolina-based firm had posted a quarterly profit of $168 million before Thursday’s disclosure.

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Bank of America Corp. cut third-quarter earnings by $400 million, wiping out the surprise profit it reported last month, on higher litigation costs tied to probes of the firm's foreign-exchange business.
Bank of America, Legal, Costs, Profit
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2014-43-06
Thursday, 06 Nov 2014 06:43 PM
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