Chinese bank says Bank of America selling shares (2:45 p.m.)
BEIJING — Bank of America Corp. is selling part of its stake in China Construction Bank Ltd., China’s second-largest state-owned lender, in a deal that could be worth up to $3 billion as the US institution raises money to cope with trouble at home.
Bank of America will sell 5.62 billion Construction Bank shares, the Chinese bank said in a statement Wednesday. It gave no financial details but Construction Bank shares were trading at 4.24 Hong Kong dollars (54 US cents) on Wednesday morning in Hong Kong, which could make the deal worth up to $3 billion.
Phone calls to Bank of America spokespeople at its Asian headquarters in Singapore and Hong Kong were not answered.
“Bank of America is reducing its China Construction Bank shares due to its consideration of its own financial conditions under the current severe turbulence of the international financial crisis,” the Chinese bank’s statement said. “Construction Bank expresses its understanding.”
The sale would represent about 12 percent of Bank of America’s holdings of 44.7 billion Construction Bank shares.
Bank of America, based in Charlotte, North Carolina, bought 9 percent of the Chinese bank in 2005 for $3 billion and the two launched a strategic partnership amid a flurry of tie-ups between Chinese lenders and foreign partners.
China has encouraged such partnerships in an effort to modernize the country’s banking industry.
Bank of America paid $1.9 billion in May to increase its stake in Construction Bank to 11 percent and raised its holdings to 19.1 percent in November.
Other US and European institutions are reported to be considering selling some of their stakes in Chinese banks to raise money.
Bank of America received a $15 billion investment in preferred equity as part of the US government’s $700 billion industry bailout.
Construction Bank, based in Beijing, is China’s second-largest commercial lender by assets after Industrial & Commercial Bank of China Ltd.
Bank of America and Construction Bank plan to continue their strategic cooperation, the Chinese bank said. The two banks have agreed to let their customers use each other’s automatic teller machines and say they are considering other ventures. (AP)
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