Financial Business Review: BofA Legal Battles, Bond Trading Heats Up, Fed Pressure

Bank of America (NYSE:BAC) and attorneys representing more than 1,000 former Merrill Lynch brokers are in early stage discussions, in an attempt to resolve claims on behalf of the brokers that might eventually cost the bank hundreds of millions of dollars. The injured parties says that they are due deferred compensation from the 2009 BofA takeover.

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Recent changes at BlackRock (NYSE:BLK) seem to be inducing Goldman Sachs (NYSE:GS) to quicken its preparations to launch a bond-trading platform, say inside sources. The platform, GSessions, which could appear later in May, will charge fees lower than on typical bond trades.

Major banks such as BNY Mellon (NYSE:BK) and JPMorgan (NYSE:JPM) are under pressure from the Fed to pull back their exposures to the $1.7 trillion triparty repossessions market. Though not well known, that market is a major source of funding for large firms’ trading businesses. Regulators have had informal discussions regarding the possibility of classifying it as Systemically Important, and increasing oversight on it as well.

The Royal Bank of Scotland (NYSE:RBS) posts a first quarter pretax loss of £1.4 billion, compared year-to-year to a £116 million loss in 2011. Changes in the valuation of the bank’s debt was blamed for most of the current deficit. On the upside, operating profit of £1.2 billion beats the £800 million consensus. RBS places an additional £125 million in reserve for PPI claims, and says it will repay its remaining state emergency loans and resume dividend payments on preferential shares, next week.

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