Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Bank of America sells stake in Chinese bank

Troubled US bank sells 13.1bn shares – half its holding – in China Construction Bank for .3bn

Bank of America is selling off half of its holding in China Construction Bank to a group of unidentified investors.

The US’s largest bank by assets said it will sell 13.1bn shares in the Chinese bank for .3bn (£5.1bn). The sale will generate a gain of .3bn for troubled BoA.

The move comes just days after billionaire investor Warren Buffett took a bn stake in BoA. The bank has sold off other assets, including its Canadian and European credit card operations, in an attempt to calm investors’ fears that it cannot cope with the legacy of it sub-prime mortgage business and will struggle to meet new capital requirements for banks.

BoA’s shares had halved this year before Buffett’s arrival. They have climbed sharply since and continued to rise after the announcement of the CCB sale.

Chief executive Brian Moynihan has been selling businesses and assets as the firm seeks to comply with international capital standards set by the Basel committee on banking standards.

BoA first got its stake in CCB before its initial public offering in 2005. It was the second-biggest shareholder in CCB at year-end, behind the Chinese government. After the sale, BoA will still hold about 5% of CCB. Moynihan said his bank was in talks to expand a separate existing “strategic assistance agreement” with CCB. “Our partnership with China Construction Bank has been mutually beneficial,” Moynihan said.

BoA ran up record losses and became a magnet for litigation after its purchase of Countrywide, once the US’s largest sub-prime home loan firm. Shareholders are objecting to an .5bn settlement the bank agreed with investors who lost money on mortgage-backed securities.

The bank is also facing another bn lawsuit brought by American International Group, the largest mortgage-security-related action filed by a single investor. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds