BOK to raise $1.8 Bn by selling stakes to Chinese investors

This article was last updated on April 16, 2022

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Bank of America announced on Monday that it would sell most of its remaining holdings in China Construction Bank to a group of unidentified investors, in a deal projected to raise $1.8 billion.

Bank of America, which will retain about 1 percent of the Chinese bank’s common shares, has sold much of its stake over the last several months. In August, Bank of America raised about $8.3 billion from selling half of its China Construction Bank assets.

The deals are part of the bank’s broader strategy to clear noncore assets from its books, a move aimed at allaying fears that Bank of America lacks sufficient capital. In recent months, it has also sold its Canadian credit card division and announced plans to auction off its European card operation. In August, Warren E. Buffett, the chairman of Berkshire Hathaway, agreed to invest $5 billion in Bank of America.

“Our decision to sell the bulk of our remaining shares in China Construction Bank is consistent with our stated objective of continuing to build a strong balance sheet,” the bank’s chief financial officer, Bruce Thompson, said in a statement. Mr. Thompson added that the latest China Construction Bank deal “will generate approximately $2.9 billion in additional Tier 1 common capital.”

A group of international financial regulators, the Basel Committee on Banking Supervision, sets minimum capital requirements for big banks, including required levels for Tier 1 capital, considered a crucial measure of the health of an institution.

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