BEIJING — Bank of America Corp. said it plans to raise its stake in China Construction Bank Corp., one of China's biggest state-owned lenders, to 19.1% from 10.75%.
The purchase would bring Bank of America's holdings in its Chinese counterpart to about 44.7 billion of its Hong Kong-listed H shares, the U.S. bank said Monday in a statement.
The statement didn't specify how many shares Bank of America intends to buy, or the value of the deal. But the statement implies the total purchase would be about 19.5 billion H shares, worth about HK$80.1 billion (US$10.3 billion) at China Construction Bank's closing price of HK$4.11 a share in Hong Kong trading Monday.
The deal comes as many U.S. lenders are desperate for capital. But Bank of America has fared relatively well amid the current financial crisis and used its position to reach a deal in September to purchase Merrill Lynch & Co. Bank of America had the option to increase its stake in China Construction Bank as part of its earlier investment deal in the Chinese lender, and BofA's chief executive said in April that his company planned to exercise that option. Bank of America said in its statement Monday it expects the deal to be completed by the end of this month.
China Construction Bank was the first big Chinese lender to go public, in October 2005, after a massive government recapitalization effort for China's state-owned banks. Bank of America bought a 9% stake in the Chinese lender ahead of that initial public offering for $3 billion. Earlier this year, it increased its ownership to 10.75%.
China Construction Bank's shares peaked in October 2007 following a huge run-up in Chinese share prices, but they have since lost over half their value.
Bank of America said the new shares it is acquiring cannot be sold until Aug. 29, 2011, without China Construction Bank's consent. "Bank of America intends to remain a long-term and significant strategic investor" in China Construction Bank, it said in its statement.
Spokesmen for Bank of America and China Construction Bank couldn't immediately be reached for comment.