Just like Citigroup, it adjusted its reported earnings because of an investigation into its foreign exchange business. The charge turned Bank of America’s $168 million profit for the quarter into a $232 million loss.
Mike Blake / Reuters
Bank of America is now the second large U.S. bank to redo its earnings for the third quarter due to "advanced" talks with regulators over its foreign exchange business. The bank announced today that it was adding a $400 million litigation expense to its earnings for the third quarter, turning the $168 million in profits it initially reported in the middle of October into a $232 million loss.
"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," it said today.
Bank of America's weak profits were already heavily affected by $5.6 billion in legal costs, which were mostly attributed to its $16.7 billion settlement with the Justice Department and other agencies over its pre-crisis mortgage securities business.
Last week Citigroup made a similiar move, adjusting its profit downward $600 million thanks to "rapidly-evolving" investigations and "very recent" talks with regulators. It also disclosed in a separate regulatory filing that regulators in the U.S., U.K., and Switzerland were looking into its foreign exchange business along with the criminal division of the U.S. Department of Justice.
JPMorgan also disclosed that the Justice Department was conducting a criminal investigation of its foreign exchange business and upped the top end of the litigation losses it could face beyond what it already had saved in reserves to $5.9 billion from $4.6 billion. Several European banks including Deutsche Bank, RBS and Barclays also took large charges in the third quarter to pay for the possible legal fallout from the foreign exchange manipulation investigations.
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