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BoA tries to pass stress test with China bank stake sale
12.05.09
Bank of America has raised $7.3 billion (£4.8 billion) by selling a 6% stake in China Construction Bank as it struggles to raise the $34 billion which US regulators say it needs to pass their stress tests.
The main buyers of the stake were the locally based and Goldman Sachs-backed Hopu Investment Management.
Bank of America was partially freed from a lock-in agreement last week which enabled it to sell one-third of its 16.7% stake in China's second largest bank. It still retains a 10.6% stake in China Construction Bank which is still subject to a continuing lock-in.
Bank of America is reported to have accepted HK$4.20 a share for its holding which is well below the $4.81 the shares were trading at in Hong Kong today.
Temasek already has a 5.65% stake in China Construction Bank and it was not clear what this had increased to today. The Singaporean wealth fund is also a sizeable investor in Bank of America after its spent $5.9 billion attempting to bail-out Merrill Lynch before Bank of America took it over. Temasek also owns large stakes in Standard Chartered Bank and Barclays.
In January, Royal Bank of Scotland sold its entire 3.4% stake in rival Bank of China for £1.6 billion as it also sought to boost its balance sheet.
