Banking giants' legal expenses soar in face of investigations
JPMorgan Chase & Co set aside $1.1bn (£684.4m) in the third quarter of the year to cover potential legal costs, including those relating to the ongoing foreign exchange investigation.
October 17, 2014 at 06:08 AM
2 minute read
JPMorgan Chase & Co set aside $1.1bn (£684.4m) in the third quarter of the year to cover potential legal costs, including those relating to the ongoing foreign exchange investigation.
Bank of America and Citigroup also saw significant increases in their legal spend.
JPMorgan chief financial officer Marianne Lake said in a conference call this week that the sum includes a best-guess estimate of costs related to allegations that the bank, along with other lenders, manipulated the foreign exchange markets.
According to quarterly filings, JPMorgan's Q3 legal expenses have increased by $400m (£249m) on the previous quarter. The figure is still significantly lower than the $9.3bn (£5.8bn) set aside in Q3 2013. Those results marked the first time the bank posted a quarterly loss in more than eight years.
JPMorgan's overall revenue for the quarter rose by 5% to $25.2bn (£15.7bn), while net income increased to $5.6bn (£3.5bn) compared with a net loss of $400m in Q3 2013.
Bank of America's litigation costs increased to $5.6bn (£3.5bn) in Q3, up from $4bn (£2.5bn) in the prior quarter and from last year's equivalent of $1.1bn.
In August the bank agreed a mammoth $16.7bn (£10.4bn) settlement with the Department of Justice to resolve claims that it misled investors in its mortgage bonds.
Overall, Bank of America's quarterly revenue fell slightly by 1% year on year to $21.43bn (£13.3bn).
Meanwhile, Citigroup's legal expenses for the quarter increased from $677m (£421.5m) to $951m (£592.1m) year on year, accounting for 8% of operating expenses totalling $12.4bn (£7.7bn).
Overall revenue at Citigroup grew to $19.6bn (£12.2bn) in Q3, marking a 9% increase year on year, while net income increased by 7% from $3.2bn (£2bn) to $3.4bn (£2.1bn).
Both JPMorgan and Citigroup are among a group of US and European banks in talks with the UK's Financial Conduct Authority over a settlement in relation to the alleged rigging of the foreign exchange markets.
More than a dozen firms, including Allen & Overy and Sullivan & Cromwell, have been mandated by banks involved in the scandal. Skadden Arps Slate Meagher & Flom is acting for JPMorgan while Covington & Burling is representing Citigroup.
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