Bank of America may sell over half of its stake in China Construction Bank
August 26, 2011‐ USA
Reports emerge that the Bank of America, the largest bank holding company in the US is contemplating to sell over half of its shares in the China Construction Bank Corp. to some wealth funds in the Asian and Middle Eastern countries.
As per the report, the unnamed officials who are negotiating the deal said that Bank of America is willing to sell over half of the 10% stake that it holds in the China Construction Bank. The deal could close the by early next week. The bank could raise $9 million if the deal is carried on. However, the Chinese bank has said that the Bank of America recently agreed to hold at least half of its stake for the long term.
After the Bank of America's shares took a pounding at the markets during the past month, the bank has stepped up its efforts to increase its capital cushion. Warren Buffett of Berkshire Hathaway has recently invested $5 billion in the Bank of America. Warren Buffett will get preferred shares that pay a dividend of 6% and will also allow Berkshire Hathaway to buy 700 million common shares at $7.17. This move will help calm the concerns that the bank is under-capitalized.
Potential investors in the China Construction Bank include Kuwait Investment Authority, China Life and Temasek Holdings. The Bank of America Corp. has gained 1.4% in NYSE after the news broke out about the possible selling of part of its stake in the Chinese bank.
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