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Bank of America’s 20 Days of Trading Losses Included Biggest Since 2008

Bank of America Corp. (BAC), the second- largest U.S. lender, had trading losses on 20 days in the third quarter, led by a $119 million drop on one day, the largest single-day hit since 2008.

The 20 days of losses compared with three in the second quarter and came after a perfect trading period in the first three months of 2011, according to a quarterly filing yesterday from the Charlotte, North Carolina-based lender. Bank of America had 44 days of positive trading revenue in the third quarter, or 69 percent of the time.

The firm’s banking and markets division, overseen by co- Chief Operating Officer Thomas K. Montag, posted less than half the trading revenue of any of its major U.S. rivals, excluding accounting gains. The decline in revenue from fixed-income and equity trading helped lead the division to its first loss since Bank of America bought Merrill Lynch & Co. in 2009.

Fixed-income, currency and commodities trading generated $314 million, the lowest amount since 2008, while equities revenue was $757 million excluding debt-valuation adjustments, or DVA. Total trading revenue fell 76 percent from a year earlier, excluding DVA.

Fixed-income results were affected as the company wound down its proprietary trading business, which makes bets with the firm’s own money and contributed $434 million of revenue in the first half of the year and zero in the third quarter, Chief Financial Officer Bruce Thompson said last month on a conference call with analysts. A slow market for new bond issues also hurt the FICC unit, Thompson said.

The Standard & Poor’s 500 Index dropped 14 percent during the quarter, the worst decline since the fourth quarter of 2008, and the Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of buying insurance against drops in the S&P 500, surged 160 percent to its highest quarterly reading since the first three months of 2009.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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