Bank of America Corp (BofA) yesterday sold its entire remaining stake in China Construction Bank Corp (CCB) for $1.47 billion, ending its eight-year investment in the Chinese lender.
The North Carolina-based bank sold 2 billion shares amounting to 1 per cent of all CCB shares outstanding at HK$5.70 each.
BofA said that the transaction is expected to generate a pretax gain of approximately $750 million in the third quarter of 2013.
This gain could be partially offset by negative fair value option adjustments and debit valuation adjustments if the company's credit spreads, which have improved significantly during the third quarter of 2013, remain at current levels when measured on 30 September 2013.
"The Bank of America-CCB relationship continues to bring substantial benefits to each company," said Bank of America CEO, Brian Moynihan.
"We have built a strategic partnership based on shared operational expertise, and our clients in China and Asia recognize Bank of America's ongoing association with one of the world's leading financial institutions," he added.
BofA had first purchased 8.2 per cent shares of CCB for $3 billion during the bank's maiden IPO in June 2005. In June 2008 it exercised part of its option by increasing its stake to 10.75 per cent by purchasing 6 billion more shares for approximately $HK2.42 amounting to $1.86 billion under a formula in the agreement.
Under the stock purchase agreement the US banker could increase its stake to just below 20 per cent.
Since 2011, BofA had sold part of the stake on three occasions and raised around $16.37 billion.