The Bank of America will get 8.3 billion U.S. dollars, selling its share in China Construction Bank (CCB) – the second largest Chinese bank – is informed by Agence France-Presse.
5% of CCB shares will be purchased by the group of local investors. Thus the share of the BoA in the authorized capital stock of CCB will amount to 5% after the completion of the deal.
The BoA invested in China Construction around 3 billion U.S. dollars in 2005 and since then it has been increasing its share fraction. In November 2008, the Americans paid around 7 billion and enhanced their share to 19.1%. Later the BoA sold part of shares to the Chinese credit foundation having reduced its share in the bank to 10%.
After selling a part of its share in China Construction, the Bank of America fixed the profit received during the time of partaking in the capital of the Chinese bank. In quarter two of the current year the Bank of America reported net negative profit of 8.8 billion U.S. dollars. This was the highest quarter loss in the history of the bank.
China Construction Bank is the second largest bank in China. The assets managed by it exceed 1.6 trillion U.S. dollars, and the capitalization is around 160 billion U.S. dollars. The largest stock owner of the bank is the Chinese government.
Since the beginning of 2011 the shares of the Bank of America lost over one third amid the investors’ anticipations that the bank will be forced to make extra emission in order to correspond to the new capital requirements. To avoid such scenario the board of the BoA took a decision to sell non-key assets and to narrow the costs of the bank.
In mid August the BoA sold Toronto-Dominion Bank.