More NewsBofA Sells Half of its Shares in China Construction Bank

BofA Sells Half of its Shares in China Construction Bank

Bank of America (BofA) has agreed to sell approximately 13.1 billion common shares of China Construction Bank (CCB) in a private transaction with a group of investors. The sale is expected to generate approximately US$8.3bn in cash proceeds. The transaction is expected to close in the third quarter of 2011, and is subject to customary closing conditions. Following closing, BofA will hold approximately 5% of CCB.

“Our partnership with CCB has been mutually beneficial,” said BofA chief executive officer (CEO) Brian Moynihan. BofA and CCB are discussing a potential expansion and extension of the existing assistance agreement.

“This sale of approximately half of our shares of CCB stock is expected to generate about US$3.5bn in additional Tier 1 common capital and reduce our risk-weighted assets by US$7.3bn under Basel I,” said chief financial officer (CFO) Bruce Thompson. “This month alone, through non-core asset sales and other actions, we expect to generate approximately US$5.8bn in additional Tier 1 common capital and reduce risk-weighted assets by approximately US$16.1bn under Basel I.”

The current proposed Basel III standards place restrictions on capital that represents ownership in financial institutions above 10%. The sale of CCB shares announced today would put BofA’s ownership in CCB below 10% and would remove the significant investment in financial institutions deduction from the company’s Tier 1 common capital under Basel III associated with this CCB stake.

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