Bank of America raises $8.3b in partial exit from CCB

Although BofA has not named the investors, The New York Times earlier reported that a consortium of Asian and Middle East sovereign wealth funds as well as several private equity firms was in negotiations with bankers. The Financial Times claimed a fortnight ago that BofA had held talks with the Kuwait Investment Authority (KIA) and the Qatar Investment Authority (QIA), but that progress was slow.

Sources told Reuters that Temasek was among the buyers, but these seems barely credible given that the Singaporean sovereign wealth fund sold off $1.2 billion of its own shares in CCB in July. Temasek purchased BofA's option to buy shares in a CCB rights offering last year.

BofA's stake in CCB now stands at around 5%. Last week, Zhang Jianguo, president of CCB, said that the US lender would retain ownership of at least 5%. Following the sale, Temasek is now the Chinese bank's second-largest shareholder on about 6.2%, with BofA dropping to third.

The US lender will record a post-tax gain of around $3.3 billion from the CCB sale. Just as importantly, it takes the bank closer to the estimated $50 billion it needs to add to capital reserves in order to comply with Basel III requirements. BofA has generated around $30 billion from asset sales in the last six quarters, according to Reuters, and this latest transaction comes days after Warren Buffett agreed to invest $5 billion in the lender.

BofA paid $3 billion for a 9.9% stake in CCB ahead of the bank's IPO in 2005. It still holds 11.5 billion of the 23.6 billion shares that exited their lockup period on August 29. A further 2 billion could come onto the market in August 2012.

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• Topics
• Greater China
• Financials
• Investments
• PIPEs
• Temasek Holdings
• QIA
• KIA
• Bank of America Merrill Lynch
• CCB