The nation's fourth-largest bank said the action is needed because of an accounting ruling issued Tuesday by the U.S. Court of Appeals for the Fourth Circuit in a case involving the bank BB&T Corp. The ruling provides guidance on accounting standards for recording the timing of cash flows on leveraged leases.

Wachovia said it completed the transactions affected by the ruling between 1999 and 2003. It said it stopped originating these transactions, which involved lease-to-service contracts and leases of technological equipment, in 2003. The charges will eventually be recognized as income over the remaining terms of the leases, typically between 35 years and 40 years.

The news is the latest blow to the Charlotte-based bank, which in April reported a first-quarter loss of $393 million and announced a 41 percent cut to its dividend.

Last week, the bank said it would pay $144 million to settle federal allegations that it failed to stop telemarketers who took advantage of thousands of elderly consumers.

Reports also circulated that federal prosecutors are investigating Wachovia in a probe into alleged laundering of drug proceeds by Colombian and Mexican money-transfer companies. Wachovia declined to confirm the investigation, but said the bank is "committed to maintaining a strong anti-laundering program," spokeswoman Christy Phillips-Brown said.

As a means to help better position itself in the industry, the bank recently raised $8.05 billion in an offering of common and preferred stock.

On Wednesday, Wachovia declined to say if it plans to raise capital more following the appeals court ruling.

"Even with this charge we will still have one of the strongest capital positions in the industry," Phillips-Brown said.

Wachovia shares rose 14 cents to $29.54 in morning trading.

-- AP Business Writer Stephen Bernard in New York contributed to this story.