The Bank of America has reached a “comprehensive” settlement with the US Department of Justice and other US authorities including the Securities and Exchange Commission, worth approximately $16.65bn (£10bn), that it said will have an impact on its third-quarter pre-tax earnings of roughly $5.3bn.
The claims, which relate to allegations of mis-conduct around the sale and securitisation of residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs), mainly related to conduct at Countrywide and Merrill Lynch before the Bank of America acquired the businesses. The settlement consists of $9.65bn in cash and approximately $7bn of consumer relief.
Brian Moynihan, chief executive officer, stated: “We believe this settlement, which resolves significant remaining mortgage-related exposures, is in the best interests of our shareholders, and allows us to continue to focus on the future.”
The statement, however, also noted: “The settlement is expected to reduce third-quarter 2014 pre-tax earnings by $5.3bn, or approximately $0.43 per share after tax.”
