Bank of America expects loss after settlement

Bank of America Corp said it expected to take more than $20 billion in charges after settling with mortgage bond investors, resulting in a second-quarter loss.

The largest US bank said it expected to post a loss of 88 cents to 93 cents per share for the quarter.

Bank of America said its charges would include an $8.5 billion settlement with bond investors for allegedly selling them mortgages that did not meet their investment criteria, and another $5.5 billion to cover expected payments to other mortgage bond investors.

The bank is also expecting to take $6.4 billion in other charges linked to mortgages.

The $8.5 billion settlement covers claims from 22 institutional investors, including BlackRock Financial Management, Pacific Investment Management Co and Western Asset Management. The bank said the settlement is linked to mortgages made by Countrywide Financial Corp, once the nation's largest mortgage lender, which it bought in 2008.

Shares of Bank of America were up 4.4% at $11.30 in trading before the market opened.

Source: Business Standard