Bank of America Corp. agreed to sell about half its stake in China Construction Bank Corp. for cash proceeds of about $8.3 billion, a deal that further improves the bank's liquidity position and helps it meet regulatory standards.
Bank of America is motivated to sell the stake in order to meet new capital requirements under international banking rules known as Basel III.
Shares rose 3.6% to $8.04 in recent trading.
The deal for about 13.1 billion common shares is expected to close in the third quarter and result in a gain of about $3.3 billion. Bank of America will retain a stake of about 5% in CCB.
The buyer wasn't disclosed, but Dow Jones reported Singapore state investment company Temasek Holdings Pte. Ltd. was considering acquiring a part of the stake, citing people familiar with the situation.
Last week, the Chinese lender hinted the possibility of Bank of America reducing its stake and CCB unveiled plans to raise CNY80 billion ($12.5 billion) to boost its capital base.
Bank of America Chief Financial Officer Bruce Thompson said the sale is expected to generate about $3.5 billion in additional Tier 1 common capital and reduce its risk-weighted assets by $7.3 billion under Basel I.
Last week, Warren Buffett's Berkshire Hathaway Inc. said it will invest $5 billion in Bank of America, giving the nation's biggest bank a much-needed vote of confidence amid questions about the credibility of its management.
The investment, similar to Buffett's move with Goldman Sachs Group Inc. three years ago, comes as Wall Street has wondered if Bank of America would be able to raise enough capital to meet new global standards.