Bank of America has sold about half of its 10% stake in China Construction Bank to a handful of sovereign-wealth funds and institutions in the US and Asia, totaling $8.3 billion before taxes.
(August 29, 2011) -- Bank of America has sold half of its stake in China Construction Bank (CCB) to a range of sovereign-wealth funds and institutions in the US and Asia.
The sale is expected to generate approximately $8.3 billion in cash proceeds.
"Our partnership with China Construction Bank has been mutually beneficial," said Bank of America Chief Executive Officer Brian Moynihan in a statement.
The move by Bank of America, which purchased its stake in CCB in 2005, around the time of the Chinese bank’s initial public offering, for roughly $3 billion, is also the latest in a string of transactions that have added to the bank's capital reserves. Last week, Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett's investment vehicle injected $5 billion into Bank of America, driving up its previously lagging shares.
"We are building the best franchise in financial services and we have laid out a clear plan to deliver long-term shareholder value," said Moynihan in a statement. "I remain confident that we have the capital and liquidity we need to run our business. At the same time, I also recognize that a large investment by Warren Buffett is a strong endorsement in our vision and our strategy."
Buffett added: "Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it. I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That's what customers want, and that's the company's strategy."