Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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Banks

BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Property

Zoopla wins back customers from online property rival

Zoopla chief executive Alex Chesterman has branded rival OnTheMarket “a failed experiment”, and said that his property site was winning back customers at a record rate. OnTheMarket was set up last year, aiming to compete with Zoopla and Rightmove, the UK’s two biggest property portals. It allowed estate agents to list their properties more cheaply […]

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Currencies

Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Categorized | Banks

Bank of America: no easy answers


Posted on January 31, 2014

The joke is on us. Why would anyone think anything related to pre-crisis mortgage deals would be simple? A New York state Judge on Friday delivered a long-awaited decision on an $8.5bn agreement by Bank of America to settle claims by private investors over faulty Countrywide loans bundled into bonds. Questions over whether the settlement would stand have been an obstacle to BofA’s efforts to move past the financial crisis and catnip for BofA bears who believed BofA could be forced to pay a sum perhaps a few times higher. AIG led a group of investors contesting the deal as offering scant compensation. Everyone was expecting a thumbs up or a thumbs down, but that is not exactly what they got.

    Judge Barbara Kapnick approved the settlement, saying that the trustee for the bonds (BNY Mellon) did not act in bad faith. That seems straightforward enough. But then, a wrinkle. She excluded from her approval an issue over whether BofA must repurchase loans (packaged into bonds) whose terms the bank modified. So that could still be litigated. Attorneys for collateralised debt obligations (of course) called Triaxx have argued that the trustee failed to investigate modified mortgage repurchase claims worth about $31bn. BofA said it believed outstanding issues can be addressed “without undue delay”, while AIG is likely to appeal the broader approval.

    BofA has reserved for the $8.5bn. And it has made strides in resolving its legal problems, although issues remain. In the fourth quarter, litigation expense was $2.3bn. Investors these days seem more focused on when an economic recovery and higher rates can produce revenue and margin growth. Shares fell just a per cent on Friday. The punch line? Investors cannot put this pesky settlement completely in the past just yet.

    Email the Lex team in confidence at lex@ft.com