$2.4bn paid by Bank of America to settle lawsuit with Merrill Lynch
Bank of America pays $2.4bn to settle Merrill Lynch lawsuit
Bank of America was hit hard during the 2008 financial crisis
28 September 2012 Last updated at 16:01
Bank of America has paid $2.43bn (£1.5bn) to settle a lawsuit over its acquisition of Merrill Lynch.
Bank of America merged with investment bank Merrill Lynch at the height of the financial crisis and, afterwards, experienced heavy losses.
Investors had argued that Bank of America made false or misleading statements about the financial health of the two banks.
Bank of America maintains it did nothing wrong.
“Bank of America denies the allegations and is entering into this settlement to eliminate the uncertainties, burden and expense of further protracted litigation,” it said in a statement.
Separately, the bank said that it will be hit in the third quarter by a pre-tax loss of $1.9bn relating to the company’s credit spreads and a further $800m due to changes in the UK corporate tax rate.
The class action lawsuit is being heard in the US District Court for the Southern District of New York and the judge will now examine the settlement.
The bank was badly hit during the financial crisis and has struggled with losses on mortgage assets related to Merrill and its 2008 purchase of subprime lender Countrywide Financial.
The company said its total legal expenses will be about $1.6bn for the three months to 30 September.