Ongoing investigations and litigation related to the global financial crisis potentially pose a significant risk to earnings for big banks, according to a report from Moody’s. The credit ratings agency found that global investment banks have recorded $219 billion in litigation provisions related to the financial crisis. Bank of America (BAC) has the highest litigation provision at $70 billion, followed by JP Morgan (JPM) at $37 billion. ‘We have to keep in mind that any litigation charge and upcoming litigation issue, it presents a tail risk and it’s very hard to predict at the outset how much that tail risk will be,’ said Ana Arsov, Associate Managing Director at Moody’s. Arsov said that some firms, like Royal Bank of Scotland (RBS), still haven’t fully settled potential claims from the financial crisis.
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