Bank of America taking $400M charge

NEW YORK (AP) - Bank of America Corp. said last Thursday it is taking a $400 million charge in the third quarter to cover litigation costs related to a regulatory inquiry into the bank's foreign exchange business. The move follows similar disclosures by JPMorgan Chase & Co., and Citigroup that signal banks in the U.S. and abroad are facing allegations that they manipulated foreign-exchange rates. In a regulatory filing, Bank of America noted that it has been engaged in "separate advanced discussions with certain U.S. banking regulatory agencies to resolve matters related to its foreign exchange business." Last month, the Charlotte, North Carolina-based company reported a profit of $168 million for the third quarter. But the bank took a $5.3 billion charge to help cover a settlement with the Justice Department over its sale of mortgage-backed securities. Those legal costs contributed to a penny per-share loss for the quarter. The $400 million charge for litigation costs deepens that quarterly loss to $232 million, or 4 cents per share. Shares in Bank of America slipped 13 cents to $17.23 in after-market trading last Thursday. The stock ended regular trading up 2 cents to $17.36. Last Tuesday, JPMorgan disclosed that the Department of Justice had opened a criminal investigation into its foreign exchange business. Besides the Justice Department, JPMorgan said civil enforcement authorities and foreign regulators were also investigating its foreign exchange business. In response, the New York bank boosted the amount of money set aside for legal expenses. It now has $5.9 billion in reserve, up from the $4.6 billion it reported in August. The week prior, Citigroup cut its third-quarter earnings by $600 million, citing inquiries into its foreign exchange business by regulatory agencies in the U.S., United Kingdom and Switzerland. Bank of America, JPMorgan and Citigroup have each agreed to pay billions in recent years to resolve government probes into the mortgage meltdown that helped trigger the financial crisis of 2008. The major banks sold securities that plunged in value when the housing market collapsed in 2006 and 2007. Those losses triggered a financial crisis that pushed the economy into the worst recession since the 1930s. Shares in Citigroup closed down 3 cents at $53.99. The stock was unchanged in extended trading last Thursday. JPMorgan ended regular trading up 8 cents to $61.23 but dropped 13 cents in extended trading. Published: Mon, Nov 10, 2014