Bank of America (BofA), struggling to recover from the 2008 financial crisis, said on Friday it has agreed to pay US$2.43 billion to settle a class-action lawsuit tied to its Merrill Lynch takeover.
The bank said the payment would be to settle the lawsuit that was filed in 2009 “on behalf of investors who purchased or held Bank of America securities at the time the company announced plans to acquire Merrill Lynch.”
The nation’s second-biggest bank by assets was accused of hiding huge losses at Merrill Lynch in late 2008 to avoid potential shareholder disapproval of its takeover bid.
The bank denied the investors’ claims that it had misled them about the financial health of Bank of America and Merrill Lynch, saying it was opting for a settlement “to eliminate the uncertainties, burden and expense of further protracted litigation.”
The settlement agreement also provides for some governance improvements, including conducting an annual “say-on-pay” vote by shareholders.
The settlement depends on court approval.
Bank of America chief executive Brian Moynihan said the settlement was in the best interests of the bank’s shareholders.
The bank plans to pay for it in part from its litigation reserves and will take a one-time charge of US$1.6 billion in the third quarter.
That adds to a third-quarter US$1.9 billion charge for the bank’s market value adjustment and an US$800 charge related to a British tax.
In total, the bank will have US$4.3 billion in special charges in the July-September period, or US$0.28 per share.
Analysts revised lower their third-quarter forecasts for the Charlotte, North Carolina-based bank to an average loss of US$0.14 per share.
“The settlement is higher than expected,” said Dick Bove, a banking analyst at Rochdale Securities.
“That’s obviously not good but I’m not sure anyone cares” because the charges do not reflect the bank’s operating performance, he said.
Eric Oja, an analyst at ratings firm Standard & Poor’s, was less optimistic.
“It’s just one of many, many things facing Bank of America,” he said, noting it faces huge costs in buying back mortgage loans or mortgage-backed securities.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS