Bank of America
expects this summer's global credit crunch to have a "meaningful impact" on its corporate and investment banking businesses.
"Unprecedented dislocations in the credit markets" are crimping the leveraged finance business, capital markets business and commercial paper market, CFO Joe Price said during an investor presentation.
Price spoke during a presentation at BofA's annual investment conference in San Francisco, where nearly 200 companies presented.
"The flight to quality has had an impact on any number of credit activities by denying liquidity even when there is no apparent problem with the underlying assets," according to Price's prepared remarks in a
Securities and Exchange Commission
filing. BofA's "capital markets and advisory services is being adversely affected by all of these conditions, mostly in trading, but in other activities as well. We now expect a meaningful impact on GCIB's third quarter results."
On the consumer side, Price reiterated that the company predicts credit losses will stay within their expected ranges this year. He acknowledged that "home-equity and mass-market small-business will have directionally higher loss ratios."
The company exited the subprime origination business in 2001.
The remarks come as Wall Street anxiously awaits the largest brokerage firms' third-quarter earnings.
Investors worry that the brokers will have to take massive writedowns on mortgage-related securities as investors back away from risky debt.
is set to kick off earnings on Tuesday, followed later in the week by
BofA shares slipped 45 cents to $45.90.