“The biggest US banks may have to spend a further $104bn to resolve mortgage-related legal issues as they try to put the costs of the subprime crisis behind them.

“Standard & Poor’s, the credit rating agency, estimates the banks, including JPMorgan Chase and Bank of America, may need to pay between $56.5bn and $104bn on legacy mortgage settlements with investors and counterparties.

“Payments at the upper end of the estimates would wipe out about two-thirds of the $154.9bn litigation buffer estimated to be held by the banks but would not cut into their regulatory capital.

“Large US banks have increased their reserves in the face of a new wave of lawsuits from investors who are clubbing together to argue they have lost money from buying mortgage-backed securities comprised of bad loans.”

***

Read full Financial Times article here