BofA to sell half of CCB stake
Source: Bloomberg News |
August 30, 2011, Tuesday
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Print Edition
Print Edition
BANK of America Corp has agreed to sell about half its stake in China Construction Bank Corp for a US$3.3 billion gain as the largest United States lender bolsters capital ahead of new international standards.
A group of investors will buy 13.1 billion shares in a private transaction closing this quarter that will generate US$8.3 billion in cash proceeds, Charlotte, North Carolina-based BofA said yesterday in a statement, without identifying buyers.
It keeps a 5 percent stake in CCB, and the companies are discussing an expansion of strategic relations.
"Our partnership with China Construction Bank has been mutually beneficial," BofA CEO Brian T. Moynihan said in the statement.
Moynihan, 51, has been selling businesses and assets as the bank seeks to comply with international capital standards set by the Basel Committee on Banking Supervision. BofA, which ranks as the largest US bank by assets, has slid 39 percent this year in New York trading amid investor concern that it may need to issue stock to offset capital depleted from mortgage-related losses.
Selling the shares helps BofA raise capital to comply with tougher minimums that may be imposed by regulators as they try to prevent a repeat of the 2008 financial crisis. The CCB deal will generate about US$3.5 billion in additional Tier 1 common capital and trim risk-weighted assets by US$7.3 billion under Basel I, Chief Financial Officer Bruce Thompson said in the statement.
CCB said in August it was in talks to extend a strategic cooperation agreement allowing the firms to work together on retail and corporate operations, as well as wealth management and investment banking.
The lender, which began investing in CCB before the Chinese bank's 2005 initial public offering, owned 25.6 billion shares at the end of June, BofA said in an August filing. The stake equaled about 10.6 percent of CCB's Hong Kong-listed shares, according to Bloomberg News data.
BofA was the second-biggest shareholder in CCB at year-end, trailing only the Chinese government's 59 percent stake in its Hong Kong shares, according to Bloomberg News data.
Singapore's Temasek Holdings Pte was the third-largest investor with a 7 percent stake. CCB has 240.4 billion shares outstanding in Hong Kong and 9.6 billion yuan-denominated shares listed in Shanghai.
A group of investors will buy 13.1 billion shares in a private transaction closing this quarter that will generate US$8.3 billion in cash proceeds, Charlotte, North Carolina-based BofA said yesterday in a statement, without identifying buyers.
It keeps a 5 percent stake in CCB, and the companies are discussing an expansion of strategic relations.
"Our partnership with China Construction Bank has been mutually beneficial," BofA CEO Brian T. Moynihan said in the statement.
Moynihan, 51, has been selling businesses and assets as the bank seeks to comply with international capital standards set by the Basel Committee on Banking Supervision. BofA, which ranks as the largest US bank by assets, has slid 39 percent this year in New York trading amid investor concern that it may need to issue stock to offset capital depleted from mortgage-related losses.
Selling the shares helps BofA raise capital to comply with tougher minimums that may be imposed by regulators as they try to prevent a repeat of the 2008 financial crisis. The CCB deal will generate about US$3.5 billion in additional Tier 1 common capital and trim risk-weighted assets by US$7.3 billion under Basel I, Chief Financial Officer Bruce Thompson said in the statement.
CCB said in August it was in talks to extend a strategic cooperation agreement allowing the firms to work together on retail and corporate operations, as well as wealth management and investment banking.
The lender, which began investing in CCB before the Chinese bank's 2005 initial public offering, owned 25.6 billion shares at the end of June, BofA said in an August filing. The stake equaled about 10.6 percent of CCB's Hong Kong-listed shares, according to Bloomberg News data.
BofA was the second-biggest shareholder in CCB at year-end, trailing only the Chinese government's 59 percent stake in its Hong Kong shares, according to Bloomberg News data.
Singapore's Temasek Holdings Pte was the third-largest investor with a 7 percent stake. CCB has 240.4 billion shares outstanding in Hong Kong and 9.6 billion yuan-denominated shares listed in Shanghai.
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