RBS Sells Entire Stake in Bank of China

Updated from 12:58 a.m. EST

By Jeremiah Marquez

HONG KONG -- Shares in Bank of China rose Wednesday after Royal Bank of Scotland (RBS Quote) sold its entire stake in the mainland's No. 3 lender for $2.37 billion, joining a recent string of investors who have cut their holdings in Chinese banks.

Bank of China closed 2.7% higher at 1.9 Hong Kong dollars.

RBS sold its 4.3% stake, about 10.8 billion shares, in the Bank of China for HK$1.71 per share, representing as 7.6% discount over Tuesday's closing price, the companies said in statements.

The decision to unload the shares, acquired in 2005, was part of a review of the company's businesses announced in October, RBS said.

Edinburgh-based RBS is one of several major investors to sell stakes in Chinese lenders recently.

Last week, Bank of America (BAC Quote), looking to raise money to cope with economic turmoil, sold a 2.5% stake in China Construction Bank for about $2.8 billion. Swiss bank UBS (UBS Quote) and Hong Kong billionaire Li Ka-shing's foundation also have unloaded shares in Bank of China.

The move comes less than two months after the British government took majority control of RBS amid fears about its solvency in the face of billions of dollars in write downs from souring assets.

Bank of China said RBS decided to sell its stake due to its "own strategic and financial concerns." The Chinese lender said the sale won't affect its operations and the two firms would continue to cooperate.