Bank of America Sells Shares for $1.8 Billion Gain
In the past three months, Bank of America has reached agreements to sell almost $15 billion of its China Construction Bank shares. Now, as it works to build capital and meet new international standards, Bank of America will gain $1.8-billion in the sale of most of its remaining stake in CCB.
On Monday, Bank of America said it expected that the sale of 10.4 billion common shares would bring it an expected after-tax gain of $1.8 billion. It will also leave the bank with close to 1% of common shares in CCB.
The transactions are expected to close by this month and will be handled exclusively by the Bank of America Merrill Lynch division.
The expected income will trigger deferred tax assets and Bank of America expects to generate approximately $2.9 billion of additional capital in a measure of capital know as Tier 1 common capital.
Like most Western banks, Bank of America has been dealing with the fall-out of poor investments in the mortgage industry and the subsequent repercussions. The acquisition by the American bank in 2005 was supposed to gain it a foothold in the Asian market. Instead, it just turned out to be a good place to invest. Chinese banks have weathered the global banking crisis in much better shape than their former global partners. Massive bailouts from the Chinese government and publics IPOs have allowed the Chinese banks to grow and expand.
In response to the Bank of America sell-off, CCB released a statement on it’s website pointing out that the Bank of America decision came from "market behavior that stemmed from its own needs and will not have any impact on the bank's business and development".
Image: CCB screenshot