Bank of America (BofA) has reached a settlement with the U.S. Department of Justice over misleading investors in regards to loans. The fines will total a record $16.65 billion (£10 billion).
The settlement has been split into two sections. The first is $9.65 billion in cash, a $5 billion civil penalty and $4.63 billion in compensation payments, with the other being consumer relief worth $7 billion.
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BofA expects the settlement to reduce third quarter earnings by $5.3 billion, or approximately $0.43 per share after tax.
Brian Moynihan, chief executive, said: "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."
This is the second major settlement charge BofA have paid this year following a $9.5 billion charge over misleading U.S. mortgage lenders Fannie Mae and Freddie Mac over mortgage securities. Previously, the largest fine by U.S. regulators was a $13 billion settlement reached with JP Morgan for misleading investors during the housing crisis.
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By GlobalData
