The Bank of New York Company says it has reached a settlement with the General Motors Acceptance Corporation (“GMAC”) over GMAC’s claims relating to the 1999 sale to GMAC of BNY Financial Corporation, the bank’s factoring and asset-based finance business.
The settlement agreement resolves the claims between the parties with a payment of $110 million by the Bank Of New York to GMAC. After accounting for a previously-established reserve for this matter, the net impact of the settlement will be approximately 6 cents per fully diluted share, recorded by BNY as a non-operating charge in the third quarter. The Bank of New York sold BNY Financial Corporation to GMAC for $1.8 billion in cash in 1999.
Bank of New York still expects that its third quarter operating earnings will be in line with the current First Call consensus estimate of 42 cents per fully diluted share. Reported earnings are expected to be 34 cents, including 6 cents related to this settlement and the previously announced 2 cents from merger and integration charges related to the Pershing acquisition.
The Company had previously disclosed GMAC’s claims and the potential for litigation in reports filed with the Securities and Exchange Commission.