Bank of America Corp. agreed to sell about 10.4 billion shares of China Construction Bank Corp. to a group of investors in a deal expected to generate an after-tax gain of $1.8 billion.
Bank of America has been shedding non-core assets as it aims to shore up its balance sheet ahead of new international capital standards. After the sale, Bank of America will have a remaining stake of about 1% in the state-owned lender.
The newest sale is coming about three months after Bank of America shed roughly half its stake in the state-owned lender, leaving it with a about 5% of China Construction Bank. The sale also helped the bank earn a third-quarter profit even as its mortgage unit lost $1.1 billion.
Bank of America expects the transactions, slated to close this month, will generate about $2.9 billion in additional Tier 1 common capital and strengthen its Tier 1 common capital ratio by about 0.24 percentage point.
The strategic assistance agreement between the lenders will remain in place. The agreement, which is in effect until 2016, requires Bank of America to provide strategic help to China Construction Bank in consumer and private banking, corporate and institutional banking, as well as business training.
Bank of America shares were trading flat at $6.21 premarket. As of Friday's close, the stock was down 53% for the year to date.
