Citi and Bank of America take legal hits

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The Independent Online

Two of America's biggest financial beasts were hit by a series of one-off legal charges in the fourth quarter, with the bottom line at Citigroup and Bank of America suffering as a result.

In Citi's case, net income for the final three months of 2012 came in at $1.2bn (£748m), as the bank absorbed more than a billion dollars in legal and other costs. More than $300m of that was connected to a deal with regulators over improper foreclosures.

Michael Corbat, the chief executive, who plans to cut 11,000 jobs to make the business leaner and less risky, said: "Our bottom line earnings reflect an environment that remains challenging – with businesses working through issues like spread compression and regulatory changes – as well as the costs of putting legacy issues behind us."

At Bank of America, the cost of settlements related to claims over its mortgage business drove its net income down to $732m, against $2bn in the same period in 2011.

Although its underlying performance showed signs of improvement, with the bank beating market expectations, some $5bn in previously announced mortgage-related charges pushed down its figures.

"We addressed significant legacy issues in 2012 and our strengths are coming through," the bank's chief financial officer, Bruce Thompson, said.