BofA triples third-quarter loss due to forex legal expense
Bank of America Corp (BAC.N) tripled its third-quarter loss to $232 million, in a revision that added legal costs related to global investigations into foreign exchange trading at major banks.
Regulators are investigating allegations that dealers colluded and manipulated key reference rates in the $5.3 trillion-a-day foreign currency market, which is the world’s biggest and least regulated.
Bank of America revised its results to add $400 million to its legal reserves to cover expected settlements related to foreign exchange, adding it was in advanced discussions with U.S. regulators to resolve matters related to the business.
The bank said in a filing it was being investigated by government authorities in North America, Europe and Asia but did not disclose which regulators it was in talks with.
The New York Times said people briefed on the investigation had identified the U.S. agencies as the Office of the Comptroller of the Currency and the Federal Reserve.
Britain’s financial regulator has intensified talks with six major banks over allegations of collusion and manipulation in the foreign exchange market, setting the stage for a group settlement that could cost them close to 2 billion pounds($3.26 billion).
Citigroup Inc (C.N) said last month it was setting aside an extra $600 million to cover legal expenses in the third quarter due to “rapidly evolving regulatory inquiries,” while also disclosing that it was subject to foreign exchange market probes.
The additional charge expanded Bank of America’s net loss to $232 million, or 4 cents per share, up from a reported net loss of $70 million, or 1 cent per share, announced on Oct 15.
Bank of America also lowered its litigation-related loss estimates to as much as $3 billion from $5 billion, above the sum already set aside.
JPMorgan Chase & Co (JPM.N), HSBC Holdings Plc (HSBA.L), Royal Bank of Scotland Group Plc (RBS.L), UBS AG (UBSN.VX) and Deutsche Bank AG (DBKGn.DE) have all said that they are either setting aside more money or have raised their estimate for potential foreign exchange settlements.
Bank of America’s shares were down about 1 percent at $17.23 in extended trading.
Source: Reuters – BofA triples third-quarter loss due to forex legal expense
