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China's CCB says Bank of America partnership sound
2009-01-09
BEIJING - China Construction Bank (0939.HK) said on Thursday it was "fully confident" in its strategic relationship with Bank of America (BAC.N), after the top U.S. lender sold nearly 13 percent of its holding in the Chinese bank this week. The two banks had "quite deep discussions" early on about the stake sale, an unnamed spokesman for the Chinese Bank said in a statement posted on its website (www.ccb.com). "We understand that the main reason for Bank of America's decision to trim its stake was that it has met some major difficulties with its finances. "We believe this will not affect Bank of America's position as the number two stakeholder, let alone affect the two sides' strategic cooperation," the statement said. The U.S. lender, needing cash to cope with tough economic conditions, raised $2.83 billion by selling 5.62 billion shares, or more than 2.4 percent, of Construction Bank on Wednesday, sending the Beijing-controlled bank's Hong Kong-listed shares tumbling 8.8 percent. The sale, largely expected by investors, left Bank of America with a 16.6 percent holding, but some analysts believe the U.S. bank may sell more shares to raise further cash to cope with strains in the financial system. Construction Bank's shares fell another 4.4 percent on Thursday. Construction Bank's Thursday statement did not mention any possibility of future sales of Bank of America's stake, but said the U.S. lender had repeatedly pledged to maintain and develop the partnership. "They will not give up the world's most promising market, or give up the win-win opportunity with Construction Bank," it said. "We ... are fully confident that our future strategic cooperation with Bank of America will hold more success." Chinese bank shares dropped steeply this week after the Bank of America sale, which fanned investor fears that other foreign institutions would sell off their stakes to raise cash amid torrid financial markets, and as the Chinese economy slows. Hong Kong-listed shares of Industrial and Commercial Bank of China (1398.HK), the country's biggest bank, fell 6.8 percent amid worries investors Goldman Sachs (GS.N), Allianz (ALVG.DE) and American Express (AXP.N) would trim their holdings when lock-up agreements lapse this year. Chinese regulations limit a single foreign investor to owning 20 percent of a Chinese bank.
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