BANK OF America started selling its remaining stake in China Construction Bank yesterday for up to $1.5bn (£964m), marking the final step of the US bank’s multi-year exit from the asset.
The bank joins a list of Western institutions that have found that their investments in Chinese financial firms did not provide the strategic benefits they had hoped for. Earlier this year, Goldman Sachs sold out of its seven-year investment from Industrial and Commercial Bank of China.
The sales come as the Chinese banking system has shown signs of stress, with bad loans picking up as economic growth slows. As a result, several Chinese lenders are preparing to launch equity sales to bolster their capital base.
Bank of America’s investment in CCB dates to 2005 when it paid $3bn for a 9.9 per cent stake ahead of the Chinese bank’s IPO.
The US bank increased its holdings in following years, before paring it down starting in 2009. In 2011, the bank raised a combined $14.9bn from selling shares in CCB to a group of investors that included Singapore's Temasek Holdings.
City A.M. Reporter