China's sovereign wealth fund has announced it purchased part of Bank of America's holdings in China Construction Bank (CCB) in a deal worth $1.75 billion. The embattled US banking giant announced on Monday that it would sell the bulk of its shares in the Chinese bank - a move that strengthens its capital base and helps it move towards building a strong balance sheet.
In a short statement, China Investment Corporation (CIC) said it had bought 2.76 billion CCB shares after Bank of America sold them, "with a total transaction volume of $1.75 billion". "CIC has fulfilled all legal obligations including disclosure in compliance with relevant regulatory requirements in Hong Kong," it said on Thursday. In August, Bank of America had already sold roughly half of its 10 percent share in CCB for $8.3 billion, strengthening its capital base and better implementing tougher standards imposed by global regulators.
It said Monday that it would continue to hold about one percent of the common shares of CCB, underscoring that the two banks' strategic partnership remains intact. The North Carolina-based bank is under pressure to reduce its investments in order to strengthen its capital base and meet new international capital standards. It has struggled to recover from the 2008 financial meltdown and its disastrous acquisition of troubled mortgage lender Countrywide Financial, which has resulted in lawsuits after the crash of the US housing market.
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