Bank of America Sells China Construction Bank Stake for $6.6B

NEW YORK (TheStreet) --Bank of America(BAC) agreed to sell about 10.4 billion shares in China Construction Bank for about $6.6 billion in cash, in another step towards improving its capital position.

The sale will be made through a private transaction to a group of investors and will result in an after-tax gain of $1.8 billion. Bank of America will own 1% in the Chinese bank following the transaction, down from 5%. The deal is expected to close in November.

The latest sale follows the bank's earlier divestment of about half of its original 10% stake for a pre-tax gain of $3.6 billion in the third quarter.

"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," Chief Financial Officer Bruce Thompson said in a statement Monday. "We expect this action, supplemented by the related realization of deferred tax assets, will generate approximately $2.9 billion in additional Tier 1 common capital and further strengthen our Tier 1 common capital ratio by approximately 24 basis points under Basel I."

The bank said the strategic assistance agreement between Bank of America and CCB, which includes cooperation in specific business areas, remains in place.

--Written by Shanthi Bharatwaj in New York

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