NEW YORK, Nov 17 (Reuters) - Bank of America Corp said on Monday it would boost its stake in China's third-largest bank, China Construction Bank, to 19.1 percent from 10.75 percent.
Bank of America originally bought a 9 percent stake in the Chinese bank for $3 billion in June 2005, and earlier this year boosted its stake to the current level. It said it would increase its stake by exercising the remainder of its option to buy shares from China SAFE Investments Ltd.
Following the purchase, Bank of America would own 44.7 billion H shares of China Construction Bank, worth roughly $24 billion, Reuters data show.
The initial investment has been a success for Charlotte, North Carolina-based Bank of America, the third-largest U.S. bank. Shares of China Construction Bank have risen 75 percent since the bank's October 2005 initial public offering, despite falling by more than half since peaking in October 2007.
Bank of America announced the latest investment amid growing struggles at home.
Last month, it cut its dividend in half after rising credit losses contributed to a 68 percent decline in third-quarter profit.
The bank has raised more than $22 billion of capital this year, and expects this year to complete the acquisition of Merrill Lynch & Co. It also obtained $25 billion of capital from the U.S. Treasury Department's bank bailout plan.
Bank of America said it expects to close the China Construction Bank transaction this month and 'intends to remain a long-term and significant strategic investor' in the Chinese bank. It said it cannot sell the newly acquired shares until August 29, 2011, without the Chinese bank's consent.
Shares of Bank of America closed Friday at $16.42. They have fallen 60 percent this year.
(Reporting by Jonathan Stempel; editing by John Wallace)
((jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)) Keywords: BANKOFAMERICA/CHINACONSTRUCTIONBANK (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Bank of America originally bought a 9 percent stake in the Chinese bank for $3 billion in June 2005, and earlier this year boosted its stake to the current level. It said it would increase its stake by exercising the remainder of its option to buy shares from China SAFE Investments Ltd.
Following the purchase, Bank of America would own 44.7 billion H shares of China Construction Bank, worth roughly $24 billion, Reuters data show.
The initial investment has been a success for Charlotte, North Carolina-based Bank of America, the third-largest U.S. bank. Shares of China Construction Bank have risen 75 percent since the bank's October 2005 initial public offering, despite falling by more than half since peaking in October 2007.
Bank of America announced the latest investment amid growing struggles at home.
Last month, it cut its dividend in half after rising credit losses contributed to a 68 percent decline in third-quarter profit.
The bank has raised more than $22 billion of capital this year, and expects this year to complete the acquisition of Merrill Lynch & Co. It also obtained $25 billion of capital from the U.S. Treasury Department's bank bailout plan.
Bank of America said it expects to close the China Construction Bank transaction this month and 'intends to remain a long-term and significant strategic investor' in the Chinese bank. It said it cannot sell the newly acquired shares until August 29, 2011, without the Chinese bank's consent.
Shares of Bank of America closed Friday at $16.42. They have fallen 60 percent this year.
(Reporting by Jonathan Stempel; editing by John Wallace)
((jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)) Keywords: BANKOFAMERICA/CHINACONSTRUCTIONBANK (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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