Bank of America sold 13.1 billion shares in CCB to around half a dozen buyers today for $8 billion, according to CNBC’s Kate Kelly.
Kelly said on Friday that the firm would sell around half of its stake Monday to shore up capital. The deal will provide $3.3 billion in extra capital, according to CFO Bruce Thompson.
The firm has been selling a number of non-core assets in order to calm market and investor concerns that it needs more capital ahead of the 2013 Basel III capital requirements.
Earlier the firm planned to sell all of it. Word was those plans were stalled because BofA had trouble selling it.
On August 22, the President of CCB announced that Bank of America would keep at least half of its stake.
This is the second big capital event for the firm recently. Last week Warren Buffett invested $5 billion in BofA.
Here’s the press release:
Bank of America Corporation announced today that it has agreed to sell approximately 13.1 billion common shares of China Construction Bank Corporation (CCB) in a private transaction with a group of investors. The sale is expected to generate approximately $8.3 billion in cash proceeds and an after-tax gain on sale of approximately $3.3 billion.
The transaction is expected to close in the third quarter of 2011, and is subject to customary closing conditions. Following closing, Bank of America will hold approximately 5 per cent of CCB.
“Our partnership with China Construction Bank has been mutually beneficial,” said Bank of America Chief Executive Officer Brian Moynihan. Bank of America and China Construction Bank are discussing a potential expansion and extension of the existing strategic assistance agreement.
“This sale of approximately half of our shares of CCB stock is expected to generate about $3.5 billion in additional Tier 1 common capital and reduce our risk-weighted assets by $7.3 billion under Basel I,” said Chief Financial Officer Bruce Thompson. “This month alone, through non-core asset sales and other actions, we expect to generate approximately $5.8 billion in additional Tier 1 common capital and reduce risk-weighted assets by approximately $16.1 billion under Basel I.”
The current proposed Basel III standards place restrictions on capital that represents ownership in financial institutions above 10 per cent. The sale of CCB shares announced today would put Bank of America’s ownership in CCB below 10 per cent and would remove the significant investment in financial institutions deduction from the company’s Tier 1 common capital under Basel III associated with this CCB stake.