Bank of America slumps to $1bn loss

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The Independent Online

Bank of America Corp posted a wider-than-expected third-quarter loss as improvement in its Merrill Lynch investment banking unit failed to offset consumer credit woes, sending its shares down 4.5 per cent .

The results underlined how the nation's largest bank, which has received two taxpayer bailouts totaling $45bn, remains on a government respirator after acquiring Merrill Lynch and mortgage lender Countrywide at the height of the financial crisis. The bank suffered $9.6bn in credit losses in the quarter.

In a twist, Merrill's investment banking operations injected an adrenaline shot to Bank of America's results, contributing $2.2bn in profits.

"The adverse credit picture continues to weigh on the firm and there's really a poor earnings prospect until they can turn that around," said Gary Townsend, chief executive of investment firm Hill-Townsend Capital.

Amid the bank's troubles, it must also find a new chief executive. CEO Kenneth Lewis, 62, has said he will retire at year-end. Under pressure from the Obama administration's "pay czar," Kenneth Feinberg, the bank is not paying Lewis any compensation for 2009, although he may still receive $125m of retirement benefits and accrued pay.

Bank of America reported a net loss of $1bn (£613m), or 26 cents per share, for the third quarter, compared with net income of $1.18bn, or 15 cents per share, in the same period last year at the height of the financial crisis.

Bank of America shares were down 4.5 per cent to $17.29 in premarket trading. The shares rose 29 per cent during third quarter, keeping pacing with the broader KBW Banks Index, but are still down 23 per cent over the past 12 months.