Bank of America nearing sale of CCB stake: reports
NEW YORK: Troubled US financial giant Bank of America is close to selling at least half of its 10 percent stake in China Construction Bank, The New York Times and CNBC television reported on Friday.
The bank is in talks with a consortium of potential buyers including Asian sovereign wealth funds and private equity firms like Blackstone and KKR, The New York Times said, citing an unnamed official briefed on the talks.
Under the deal, which could close as early as this weekend, BofA will sell at least half of its stake in CCB, and possibly the whole stake if it can negotiate a satisfactory price, the official told the Times.
Bank of America declined to comment on the reports.
Investors welcomed the news. BofA's stock shot up after the possible sale was first reported by CNBC, closing 1.4 percent higher.
CNBC reported that the sale could raise between $8.5 billion to $9 billion for Bank of America, citing an unnamed source familiar with the talks.
Such a sale would help Bank of America raise capital at a time when it has lagged other top US banks in moving toward the stricter Basel III capital requirements imposed by global regulators after the financial crisis.
Bank of America's share price has slumped in recent weeks as investors have abandoned it amid doubts about the strength of its capital base.
It received a big boost on Thursday when billionaire Warren Buffett's Berkshire Hathaway said it would invest $5 billion in BofA and strongly endorsed its management team, but BofA shares are still down more than 22 percent from a month ago.
The largest US bank in terms of deposits, BofA has struggled to recover from the 2008 financial meltdown.
It posted a $9.1 billion loss for the second quarter, mostly caused by a huge $8.5 settlement to resolve claims stemming from its issuance of mortgage-backed securities that went bad during the crisis.
Lately it has also been buffeted by questions over its exposure to Europe's sovereign debt crisis.
Copyright AFP (Agence France-Presse), 2011
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