NEW YORK (AFP) - Bank of America said on Tuesday it had agreed to sell its stake in China Construction Bank to the bank, exiting an investment it made eight years ago.
The US lender said it will sell approximately two billion shares, or one per cent of all outstanding shares in CCB, China's second-biggest bank, confirming earlier reports.
The statement did not provide the financial details of the sale. But at an reported price range for the shares of HK$5.63-5.81, the sale would bring in between US$1.45 billion and US$1.50 billion (S$1.85 billion and S$1.91 billion).
"The strategic assistance agreement (SAA) between Bank of America and CCB, which was recently extended to 2016, will continue," the US bank said in a statement after the US markets closed.
"The Bank of America-CCB relationship continues to bring substantial benefits to each company," Bank of America chief executive Brian Moynihan said in the statement.
"We have built a strategic partnership based on shared operational expertise, and our clients in China and Asia recognise Bank of America's ongoing association with one of the world's leading financial institutions." Bank of America initially paid US$3 billion for a 10 per cent stake in CCB in 2005 but sold most of it off two years ago to raise funds and shed non-core assets.
The announcement comes after CCB reported its first-half net profit rose 13 per cent due to higher interest income and commissions.
The stake sale is expected to generate a pretax gain of approximately US$750 million in the third quarter of 2013, Bank of America said.
Reports of the CCB sale helped to lift Bank of America shares 0.9 per cent to $14.25 in trade Tuesday.