Bank of America has confirmed the reported agreement to sell its remaining equity in China Construction Bank Corp. (CCB). Bank of America said in a statement Tuesday that the stake, 2 billion shares, represents 1% of all outstanding shares of the bank headquartered in Beijing.
Bank of America expects the transaction to contribute a pre-tax gain of approximately $750 million in the third quarter of this year. The bank did state the profit from this sale may be hindered as a result of accounting adjustments related to fair value option and debit valuation adjustments.
Bloomberg is reporting today that according to a term sheet it obtained, "Bank of America sold the stock for HK$5.70 in an open market transaction." The sale of 2 billion shares at HK$5.70 would represent a total of HK$11.4 billion. That would result in total revenue from the sale of approximately $1.5 billion after adjusting for exchange rates.
Bank of America bought 9% of the China Construction Bank in 2005 for $3 billion but has been steadily unloading its stake. There were sales that generated $3.3 billion and $1.8 billion in after-tax gains in August and November of 2011.
While Bank of America will no longer hold equity in the world's fifth-largest bank, it will continue a relationship known as the strategic assistance agreement (SSA) until 2016. Through the SSA, Bank of America assists CCB in various businesses through an analysis of processes and systems, which it says benefits Bank of America by providing greater brand recognition in China and international experience for its employees. Approximately 8,000 combined employees of the banks have participated in SSA exchanges since the partnership began in 2005.
-- Material from The Associated Press was used in this report.
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