Things turned down a bit for Bank of America (BAC), as word emerged of a new lawsuit that came out and may potentially mean a $200 million hit to the bottom line for one of the biggest banks in the United States. Investors took it well, and shares were only down marginally in Wednesday afternoon’s trading.
The lawsuit comes from UBS (UBS), who alleged that Bank of America would not cover the legal costs it incurred connected to risky mortgages that had been issued before the 2008 financial crisis. Why would it? Well, that’s actually fairly simple; UBS bought mortgages from Countrywide Financial, which Bank of America bought in 2008.
Before that, Countrywide agreed that it would cover any legal claims about the mortgages in question, and now, Bank of America—as the one who bought Countrywide—should be covering those costs. Bank of America, for its part, wouldn’t comment on the matter at all, and UBS wasn’t talking about how it reached the $200 million figure to begin with.
The Value of Time Off
Meanwhile, Bank of America also started a new program which they think might help out internal matters. They’ve started offering a sabbatical program for “long-time employees.” For employees who have been with the company at least 15 years, they can get an extra four weeks of paid leave. Those with 30 years, meanwhile, get six weeks extra.
The idea is to reward those who have been around the longest, and thus likely the most valueable to the company by giving them more time away from work to pursue their own interests, something commonly not available before a full retirement.
Is Bank of America a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BAC stock based on 10 Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 33.26% rally in its share price over the past year, the average BAC price target of $45.47 per share implies 11.41% upside potential.
