Bank of America nears to settle claims from its powerful investors to pay them $8.5 billion, according to the sources familiar with the situation. These investors lost their money on mortgage-backed securities.

Such a deal would encourage investors to seek compensation from other lenders like Wells Fargo & Co and JPMorgan Chase & Co, analysts believe.

A settlement, first reported by The Wall Street Journal, would be the largest in the banking industry to date. It would also require approval by Bank of America's board, which met on Tuesday to discuss it, according to the source.

"If you're an investor, you now know this is a potential lottery ticket, and the only way you lose is by not playing," said Matt McCormick, a portfolio manager at Cincinnati-based Bahl & Gaynor investment Counsel. "You have to think this is the first settlement we'll be seeing in a long line."

After news of a possible settlement, shares rose as much as 3.5 percent from their $10.82 close but later eased to trade around $10.95 after-hours, up about 1 percent.