BofA eyes stake sale in CCB
Source: Agencies |
August 12, 2011, Friday
|
Print Edition
Print Edition
BANK of America Corp has held exploratory talks with the principal investment funds of Kuwait and Qatar about selling part of its US$17 billion stake in China Construction Bank, three sources with direct knowledge of the talks have said.
Bank of America, which owns about 10 percent of CCB's Hong Kong-listed shares and is scurrying to raise capital for its mortgage-scarred balance sheet, will be contractually free to sell the bank shares after August 29.
BofA, the largest United States bank by assets, is likely to sell half its stake to shore up its Tier 1 capital, one of the sources said. Analysts believe the bank needs about US$50 billion to meet new capital requirements.
Talks about the Chinese bank have been held with other investors in addition to the Kuwait Investment Authority and the Qatar Investment Authority, the sources said.
If successful, the move to sell the shares to the sovereign wealth funds will alleviate concerns that BofA will be selling the stake in the open market through a block deal.
It was unclear if any agreement with the sovereign wealth funds or other investors have been cemented.
Sources said no talks are being held currently.
BofA, whose shares have fallen 27 percent in the past week, did not mention the China investment during a widely followed conference call that top executives held on Wednesday with thousands of investors. Chief Financial Officer Bruce Thompson said on the call that asset sales are being considered to boost capital.
"These stakes will be sold eventually," a second source said of the Chinese bank shares. "They have been shown previously to funds who matter."
BofA spokesman Jerry Dubrowski declined to discuss whether negotiations have been held, and officials at QIA and KIA were not immediately available for comment.
"We continue to be a significant shareholder in CCB, and we intend to continue the important long-term strategic alliance with CCB originally entered into in 2005," Dubrowski said.
The sources sought anonymity because they are not authorized to speak to the media.
BofA has not been getting much support this year from its CCB investment.
In November, BofA sold its option to buy extra shares of CCB that were available in a rights offering. BofA paid US$3 billion for a 9.9 percent stake in CCB, the world's No. 2 bank by market value, before the Chinese lender's IPO in 2005.
Chinese banks have been pressured by slowing loan growth and mounting worries about bad debts. Last month, Temasek Holdings, a state-owned investment vehicle in Singapore that bought the CCB rights from BofA, sold US$3.6 billion worth of stakes in two large Chinese banks.
Over the past year, BofA has shed its stakes in banks in South America and Latin America, as well as part of its holdings in BlackRock Inc.
Bank of America, which owns about 10 percent of CCB's Hong Kong-listed shares and is scurrying to raise capital for its mortgage-scarred balance sheet, will be contractually free to sell the bank shares after August 29.
BofA, the largest United States bank by assets, is likely to sell half its stake to shore up its Tier 1 capital, one of the sources said. Analysts believe the bank needs about US$50 billion to meet new capital requirements.
Talks about the Chinese bank have been held with other investors in addition to the Kuwait Investment Authority and the Qatar Investment Authority, the sources said.
If successful, the move to sell the shares to the sovereign wealth funds will alleviate concerns that BofA will be selling the stake in the open market through a block deal.
It was unclear if any agreement with the sovereign wealth funds or other investors have been cemented.
Sources said no talks are being held currently.
BofA, whose shares have fallen 27 percent in the past week, did not mention the China investment during a widely followed conference call that top executives held on Wednesday with thousands of investors. Chief Financial Officer Bruce Thompson said on the call that asset sales are being considered to boost capital.
"These stakes will be sold eventually," a second source said of the Chinese bank shares. "They have been shown previously to funds who matter."
BofA spokesman Jerry Dubrowski declined to discuss whether negotiations have been held, and officials at QIA and KIA were not immediately available for comment.
"We continue to be a significant shareholder in CCB, and we intend to continue the important long-term strategic alliance with CCB originally entered into in 2005," Dubrowski said.
The sources sought anonymity because they are not authorized to speak to the media.
BofA has not been getting much support this year from its CCB investment.
In November, BofA sold its option to buy extra shares of CCB that were available in a rights offering. BofA paid US$3 billion for a 9.9 percent stake in CCB, the world's No. 2 bank by market value, before the Chinese lender's IPO in 2005.
Chinese banks have been pressured by slowing loan growth and mounting worries about bad debts. Last month, Temasek Holdings, a state-owned investment vehicle in Singapore that bought the CCB rights from BofA, sold US$3.6 billion worth of stakes in two large Chinese banks.
Over the past year, BofA has shed its stakes in banks in South America and Latin America, as well as part of its holdings in BlackRock Inc.
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