Bank of America struggles to find buyers for CCB stake

BofA, which is looking to raise capital, is free to exit most of its stake at the end of the month when a lock-up period expires. The value of the holding, once $20 billion, is now estimated to be $17 billion. Shares in CCB have fallen 26% since the start of June and traders say this is partly in anticipation of BofA's exit.

According to Reuters, BofA is likely to sell half of its stake in CCB as it needs to meet about $50 billion in new capital requirements. Exploratory talks have been held with the Kuwait Investment Authority (KIA) and the Qatar Investment Authority (QIA)

However, The Financial Times reported that negotiations with potential buyers in Asia and the Middle East are floundering. KIA, which already holds stakes in Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (AgBank), is said to be disinclined to raise its exposure to China's banking sector. It would only look at CCB if BofA sold at a sharp discount. Furthermore, both ICBC and AgBank are expected to launch rights issues and KIA plans on participating.

The problem for BofA is that, as a major shareholder in CCB, it would be obliged to subscribe to the bank's forthcoming rights issue - at a time when it wants to collect capital, not part with it.

BofA sold its option to purchase shares in a CCB rights offering held last year to Temasek. But the Singaporean sovereign wealth fund is unlikely to be interested in BofA's holding, having sold off $1.2 billion of its own shares in CCB in July. Temasek's stake is now has just 2.2%, down from 6.76% at the start of the year.

BofA paid $3 billion for a 9.9% stake in CCB ahead of the bank's IPO in 2005. It currently holds 25.6 million shares and 23.6 million of them can be sold on August 29.

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• Topics
• Greater China
• Financials
• Exits
• KIA
• QIA
• Temasek Holdings
• Bank of America Merrill Lynch