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Bank of America sells shares in Chinese bank
2009-01-07
BEIJING - Bank of America Corp. raised more money Wednesday to cope with U.S. economic turmoil by selling part of its stake in China Construction Bank Ltd., China's second-biggest commercial lender, for $2.8 billion. Bank of America sold 5.62 billion Construction Bank shares in a move that reduced its stake from 19.1 percent to 16.6 percent, according to a sale sheet viewed by The Associated Press. "We're still their second largest shareholder and a long-term holder," said Bank of America spokesman Robert Stickler. "We simply were taking a little money off the table." The Charlotte, N.C.-based bank is raising money to weather the worst downturn for U.S. banks since the 1930s and absorb Merrill Lynch & Co., acquired in December. "Bank of America is reducing its China Construction Bank shares due to its consideration of its own financial conditions under the current severe turbulence of the international financial crisis," the Chinese bank said in a statement. "Construction Bank expresses its understanding." The announcement comes as Bank of America Chief Executive and Chairman Kenneth Lewis recommends that he and his top executives receive no bonus for 2008 -- a move that echoes the decisions made by a number of CEOs in the financial services industry in recent months. Bank of America received a $15 billion preferred equity investment from the U.S. government last year as part of its $700 billion bailout package. As a condition for receiving government money, lawmakers are making companies reel in bonuses. Spokesman Scott Silvestri said Tuesday that Lewis' decision had nothing to do with receiving the investment. Bank of America sold the portion of its stake in China Construction Bank for HK$3.92 (50.5 U.S. cents) per share, or a total of HK$22 billion (US$2.8 billion), an 11.9 percent discount from Tuesday's closing price. The sale was arranged by Merrill Lynch and UBS Corp. Construction Bank shares plunged 8.8 percent in Hong Kong trading to HK$4.06, dragging down Hong Kong's key Hang Seng market index by 3.4 percent. Shares in China's biggest state-owned lender, Industrial & Commercial Bank of China Ltd., also fell sharply. Bank of America bought 9 percent of the Chinese bank in 2005 for $3 billion and the two launched a strategic partnership amid a flurry of tie-ups between Chinese lenders and foreign partners. China has encouraged such partnerships in an effort to modernize the country's banking industry. Bank of America paid $1.9 billion last May to increase its Construction Bank stake to 11 percent and raised it to 19.1 percent in November. Other U.S. and European institutions are reported to be considering selling some of their stakes in Chinese banks to raise money. Construction Bank, based in Beijing, is China's second-largest commercial lender by assets after Industrial & Commercial Bank of China Ltd. Bank of America and Construction Bank plan to continue their strategic cooperation, the Chinese bank said. The two banks have agreed to let their customers use each other's automatic teller machines and say they are considering other ventures. ___ AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report. ___ On the Net: China Construction Bank Ltd.: http://www.ccb.cn Bank of America Corp.: http://www.bankofamerica.com
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