Bank of America will recognize a $1.6 billion charge for 2023’s fourth quarter, the Charlotte, North Carolina-based lender said Monday, according to a filing with the Securities and Exchange Commission.

The charge stems from Bloomberg’s announcement that it would halt in November its short-term bank yield index, which Bank of America used as an alternative benchmark rate to the London interbank offered rate, the bank said.

The impending closure forces Bank of America to “de-designate” some interest rate swaps used in cash flow hedges of certain BSBY-indexed loans and to “reclassify into earnings any amounts recognized in the accumulated other comprehensive income category of shareholders’ equity that relate to forecasted cash flows that are now no longer expected to occur,” according to the filing.

The impact of the $1.6 billion charge is expected to be recognized into the Bank of America’s interest income through 2026, the bank said.

Interest payments on the Bloomberg-indexed loans will transition to the secured overnight financing rate. 

The $1.6 billion charge reduced Bank of America’s common equity tier 1 ratio by eight basis points, as of Dec. 31, the bank said. 

Bank of America is set to present its fourth-quarter earnings Friday.