BofA sells $7.3B stake in China Construction Bank
CHARLOTTE, N.C. — Bank of America Corp. has sold part of its stake in China Construction Bank to Asian investors for about $7.3 billion as it looks to raise funds to meet government capital requirements.
Bank of America unloaded more than 13.5 billion shares, or a nearly 6 percent stake, in China Construction, the Chinese company confirmed in a statement late Wednesday. The sale leaves the Charlotte, N.C.-based bank with a stake of about 11 percent in China’s second-biggest lender.
Bank of America was widely expected to sell some of its CCB stake after a lockup period expired this month. The U.S. government’s “stress tests” last week showed BofA would need to raise nearly $34 billion to make sure it was strong enough to withstand even worse economic conditions.
The government’s assessments of the 19 largest U.S. banks found that 10 of them would need to raise more capital, with Bank of America needing the most.
Buyers of BofA’s stake included China Life Insurance and its affiliates, as well as an unidentified foreign fund and BOCI Asia, an investment banking arm of the Bank of China.
Bank of America officials have also said they are considering sales of the bank’s Columbia asset management unit, as well as several other businesses. The bank previously said it planned to sell its First Republic Bank unit, which it inherited when it bought Merrill Lynch & Co. Those sales could help raise $10 billion.
Another $17 billion will likely be raised through the issuance of common stock, and the rest of the capital could come from cash flow from operations in the coming quarters, Bank of America has said.
Following the collapse of the housing market, Bank of America was saddled with hefty losses on mortgages and mortgage-related assets. Losses were augmented by its hasty purchase of investment bank Merrill Lynch at the height of the credit crisis last fall.
Bank of America spokesman Robert Stickler said BofA would continue to be a major shareholder and partner of China Construction Bank.
Bank of America’s shares rose 15 cents of 1.4 percent to $11.16.
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