Financial services giant Bank of America Corp. (BAC) said Thursday it expects to record a goodwill impairment charge of as much as $10 billion in relation to changes in regulations related to the debit interchange fees.
In a filing with the Securities and Exchange Commission, the bank said the non-deductible goodwill impairment charge for the Global Card Services business segment would be recorded in the third quarter of 2010.
The charge that is estimated to be in the range of $7 billion to $10 billion would reflect the impact of Durbin Amendment in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law on July 21.
Under the act, the Federal Reserve Board must adopt rules within nine months of enactment of the Act regarding the interchange fees that may be charged with respect to electronic debit transactions. The company noted that the rules will take effect one year after enactment of the Act.
The impairment charge, which is a non-cash item, will have no impact on the company's reported Tier 1 and Tangible Equity Capital ratios, the company said.
The company has said earlier that the current estimates of revenue loss due to the Act will materially reduce the carrying value of the $22 billion of goodwill applicable to the Global Card Services business segment.
In the filing, Bank of America said it "expects to implement a number of actions that would mitigate some of the impact when the laws and regulations become effective."
BAC closed Thursday's regular trading session at $13.66, up $0.30 or 2.25%, on a volume of 186 million shares.
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