Published September 03, 2013
Bank of America (BAC) launched an offer worth up to $1.5 billion on Tuesday to sell off its remaining stake in China Construction Bank, closing the book on BofA’s investment in China’s No. 2 bank.
The move comes as BofA looks to strengthen its balance sheet amid tougher regulatory requirements.
The Charlotte-based lender said it expects to book a pretax gain of about $750 million in the third quarter thanks to the sale.
BofA didn't disclose a price tag on its share offering, but Reuters reported the $1.5 billion figure. The offering of 2 billion Hong Kong-traded shares of CCB was for HK$5.63 to HK$5.81 each, representing a 5.1% discount to their closing price on Tuesday of $HK$5.93.
While BofA is exiting its CCB investment, it said the two companies' strategic assistance agreement, which was recently extended to 2016, will persist.
The alliance calls for BofA to provide advice and assistance to CCB in specified business areas and includes an employee exchange program that has involved more than 8,000 employees since 2005.
"The Bank of America-CCB relationship continues to bring substantial benefits to each company," BofA CEO Brian Moynihan said in a statement.
BofA’s ties to CCB date back to 2005, when the U.S. bank shelled out $3 billion to acquire a 9.9% stake in the Chinese company.
In 2011 BofA raised about $14.9 billion by unloading a substantial stake in CCB to a group led by Singapore’s Temasek Holdings.
Shares of BofA closed 0.92% higher to $14.25 on Tuesday, leaving them up 22.7% on the year.