Bank of America
Bank of America Merrill Lynch, the world's largest wealth manager, is seeking a buyer for its wealth management operations outside the U.S., Reuters said Tuesday. REUTERS

Bank of America Corp. directors have reached a definitive settlement of litigation by shareholders who accused the bank of overpaying for Merrill Lynch & Co., a federal judge said Wednesday.

In a written order, U.S. District Judge P. Kevin Castel in Manhattan did not reveal the settlement terms but said the settlement and request for preliminary approval should be filed with his court within 14 days, Reuters reported.

According to previously filed court papers, the settlement was expected to total $20 million and resolve claims that Bank of America directors misled shareholders about Merrill's soaring losses and hid that Merrill was paying $3.6 billion in bonuses at the time.

Among the defendants is Kenneth Lewis, the onetime Bank of America chief executive who engineered the 2008 takeover.

Castel said he may delay final approval until after a separate trial, scheduled for Oct. 22, that he is presiding over in shareholder securities class-action litigation against the bank itself, where damages could be much larger.

The judge cited three reasons for a delay: a need to decide whether certain damages can be recovered in the class-action case or the director case, the scope of insurance coverage for directors, and a desire to better understand the facts.

Bank of America agreed to buy Merrill on Sept. 15, 2008, at the height of the financial crisis, but the takeover was a factor in the bank's needing a second federal bailout and suffering a 93 percent drop in its share price in six months.

The takeover closed in January 2009.

Meanwhile, the Swiss private bank Julius Baer Group Ltd. is in talks with Bank of America Corp. about acquiring its Merrill Lynch wealth management business outside the U.S., Bloomberg Businessweek reported.

Given the early stage of these discussions, the outcome is entirely open, Baer said Tuesday in a statement. Jan Vonder Muehll, a spokesman for bank, declined to elaborate.

The Bank of America wealth unit may fetch about $2 billion, said a person familiar with the matter.

Shares of Bank of America closed Wednesday up 3 cents at $8.14 on the New York Stock Exchange. They traded at $33.74 just before the Merrill takeover was announced and bottomed at $2.53 in March 2009.