BofA Says Libor Probe Draws U.S. Subpoenas on Submissions

Bank of America Corp., the second-biggest U.S. bank, received formal inquiries from investigators pressing their probe into the possible rigging of a key international lending benchmark.

The bank received subpoenas and requests for information from the U.S. Department of Justice, Commodity Futures Trading Commission and U.K. Financial Services Authority, the firm said yesterday in a filing. Bank of America also said regulators have asked whether the company properly oversaw vendors who sold identity-theft protection products to its customers.

Inquiries involve “submissions made by panel banks in connection with the setting of London interbank offered rates and European and other interbank offered rates,” Charlotte, North Carolina-based Bank of America said in the filing.

Regulators have queried at least a dozen banks worldwide about their roles in setting Libor, the most widely used benchmark for interest rates, affecting more than $360 trillion in financial products. U.S. prosecutors are preparing to file charges later this year against traders from banks involved in a bid-rigging scheme to manipulate Libor, a person with knowledge of the case has said.

Bank of America said it’s cooperating with regulators and that it has been named as a defendant, along with other Libor-setting banks, in lawsuits from investors who may have incurred losses on assets tied to the benchmark.

Firms involved in setting Libor face mounting legal claims. Berkshire Bank, a New York lender with 11 branches, sued 21 banks including Bank of America, Barclays Plc and Citigroup Inc. for damages, alleging that Libor fraud lowered interest payments it received.

Record Fine

Barclays Chief Executive Officer Robert Diamond stepped down last month after his firm was fined a record 290 million pounds ($450 million) for rigging the rate.

Bank of America plans to post a third-quarter charge of about $800 million related to a decrease in the U.K. corporate tax rate, according to yesterday’s filing. The change means the value of deferred tax assets will be diminished, the firm said.

The lender also said it will contribute $738 million to settle a price-fixing case brought by retailers over credit-card swipe fees. Visa Inc. and MasterCard Inc., the world’s biggest payment networks, and some of the largest U.S. banks agreed last month to pay merchants $6.6 billion and temporarily reduce credit-card swipe fees, or interchange, to settle the antitrust lawsuit.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE