Bank of America in the red amid wrangle with investors

BANK of America (BoA) said yesterday it would vigorously defend itself against demands from investors who have written to the bank to insist it take back billions of dollars in failing mortgages originally issued by its Countrywide subsidiary.

The Federal Reserve Bank of New York, BlackRock and Pacific Investment Management are believed to be among investors that have written to the bank. BoA, led by chief executive Brian Moynihan, said: “We’re not responsible for the poor performance of loans as a result of a bad economy. We don’t believe we’ve breached our obligations as servicer. We will examine every avenue to vigorously defend ourselves.”

News of the letter emerged as the bank reported better-than-expected third quarter earnings on declining credit losses, though a hefty one-off charge on its debit and credit card business sent it plunging into the red.

Excluding the non-cash goodwill charge, BoA reported earnings of $3.1bn (£1.97bn), or 27 cents per share, compared to analyst forecasts of 16 cents per share.

Including the $10.4bn charge, the bank posted a net loss of $7.3bn, compared to a loss last year of $2.2bn.