The financial sector did not show much activity this week, with no major market-moving news giving investors any concrete reason to pursue or avoid bank stocks. There was an overall optimism towards U.S.-based banks, though, similar to what has been observed over the recent weeks with their shares prices inching higher each day – something that can most likely be justified by the age-old addage ‘no news is good news.’
Investor confidence in European banks did suffer towards the middle of the week after the Organisation for Economic Cooperation and Development (OECD) warned that the European economy is likely to worsen this year, but nominal declines in their share prices were largely recovered by the end of the week. 
Below are some significant events pertaining to major banks that were witnessed over this week.
Bank of America
Bank of America (NYSE:BAC) is reportedly looking for buyers for 40 of its branches in southeastern New York and northeastern Pennsylvania. The diversified banking group has been working through its branches in sparsely populated regions since early last year – shutting or selling more than 300 branches since the end of 2011, in a bid to improve the overall profitability of its retail banking business. The bank does not expect a notable decline in revenues from this reduction in its branch network also because of the increasing number of customers who prefer mobile, Internet or phone banking to the traditional branch-based banking option.
You can read more about this move and its impact on Bank of America’s total value in the article Bank of America Gets Leaner In N.Y. And Pennsylvania By Selling 40 Branches .
Earlier this week, Citigroup (NYSE:C) announced that it has settled the mortgage-related lawsuit filed against it by the Federal Housing Finance Agency (FHFA) for an undisclosed amount. The FHFA filed a series of lawsuits in 2011 against 18 financial institutions in a bid to seek recourse for the billions in losses Fannie Mae and Freddie Mac incurred due to mortgage-backed securities that were mis-sold prior to the economic downturn of 2008. Citigroup became the second of the institutions named in the lawsuits to settle with the FHFA and it comes several months after GE’s (NYSE:GE) undisclosed settlement earlier this year.
Citigroup’s liability in the lawsuit was a fraction of what its competitors Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM) and RBS (NYSE:RBS) face in similar FHFA lawsuits, and this move would likely result in the other banks also squaring off with the housing regulator over the coming months, to put this issue behind them.
More details about the FHFA lawsuits and the liability of each financial institution named can be found in our article Citigroup Settles Mortgage-Related Lawsuit With FHFA.
Credit Suisse (NYSE:CS) settled a lawsuit with Elbit Systems, Israel’s biggest non-government defense technology company, earlier this week.  In the 2010 lawsuit, Elbit alleged that the second largest Swiss bank tried to cover up a fraud committed by two of its brokers, which cost investors about $1.1 billion in losses. The two brokers had already been convicted in 2009, for misleading the investors into making investments in products that had completely different underlying assets compared to what they claimed. 
The terms of the settlement, which would likely be a few hundred million dollars, were not disclosed by either party. The settlement costs will show in Credit Suisse’s income statement figure for the quarter, through a one-time increase in expenses for its investment banking operations.Notes:
- OECD warns Europe’s economy to worsen this year, threatening global recovery, Washington Post, May 29 2013 [↩]
- Elbit Systems Settles Lawsuit Against Credit Suisse Group, Elbit Systems Website, May 30 2013 [↩]
- Credit Suisse Settles Elbit Suit Stemming From Fraud, Bloomberg, May 30 2012 [↩]