BANK OF America is selling half of its holdings in China Construction Bank to a group of unidentified investors for $8.3bn (£5.1bn), in a deal which marks the troubled bank’s latest efforts to shed assets and boost capital.
The US bank, which owns the highly renowned investment bank Merrill Lynch, declined to name the purchasers of the stake but Singapore state fund Temasek is believed to be among the buyers.
Shares in the US’s largest bank by assets have fallen 39 per cent this year amid investor concerns that it lacks sufficient funds to meet new capital requirements after potential losses from mortgages and related litigation.
Just last week, billionaire investor Warren Buffett bought a $5bn stake in BofA, helping to provide a lift to Bank of America's battered stock and reassure investors that raising further capital was unnecessary.
The CCB stock sale is the latest in a series of moves by the bank, led by chief executive Brian Moynihan, to increase its capital before Basel III takes effect.
Chief Executive Officer Brian Moynihan said: “This sale of approximately half of our shares of CCB stock is expected to generate about $3.5bn in additional Tier 1 common capital and reduce our risk-weighted assets by $7.3bn under Basel I.” In recent weeks, Bank of America has sold its Canadian credit card division for $8.6bn and has put its European card operation on the block.
BofA paid $3bn for a 9.9 per cent stake in CCB before the Chinese lender’s IPO in 2005.
Shares in BofA closed up 8.1 per cent yesterday at $8.39 in New York.