DealBook: Bank of America Sells Stake in China Construction Bank

Bobby Yip/ReutersBank of America’s Hong Kong headquarters looms over a real estate project operated by China Construction Bank.

Bank of America announced on Monday that it would offload about half of its China Construction Bank holdings to a group of unidentified investors, in a deal expected to raise $8.3 billion.

The deal, which came just days after Warren E. Buffett agreed to invest $5 billion into the bank, is the latest asset sale for the beleaguered financial firm. Over the last month, Bank of America has sold its Canadian credit card division and has put its European card operation on the block, as it continues to clear noncore assets from its books.

The moves come amid recent fears that Bank of America lacks sufficient capital, concerns that its chief executive, Brian T. Moynihan, has tried to allay.

On Monday, Bank of America highlighted the deal’s effect on capital levels.

“This sale of approximately half of our shares of C.C.B. stock is expected to generate about $3.5 billion in additional Tier 1 common capital and reduce our risk-weighted assets by $7.3 billion under Basel I,” Bruce R. Thompson, the bank’s chief financial officer, said in the statement.

Under the terms of the deal, Bank of America will sell 13.1 billion common shares of the China Construction Bank Corporation to a group of unidentified investors. The bank on Friday was in negotiations with a collection of sovereign wealth funds in Asia and the Middle East, The New York Times reported. The deal is expected to close later in the quarter.

Even after the sale, Bank of America will still hold about 5 percent of China Construction Bank. According to its statement, Bank of America is in talks to expand a separate existing “strategic assistance agreement” between the two banks.

“Our partnership with China Construction Bank has been mutually beneficial,” Mr. Moynihan said in the statement.

Shares of Bank of America were up more than 5 percent in late morning trading on Monday.

Article source: http://dealbook.nytimes.com/2011/08/29/bank-of-america-sells-stake-in-china-construction-bank/?partner=rss&emc=rss