Swiss investment bank UBS, citing 'technical reasons', pulled out at the last minute yesterday from arranging the sale of US$3 billion worth of shares that Bank of America Corp held in China Construction Bank Corp, sources said. UBS on Saturday targeted European and US long-only funds for the share sale. It approached investors in Asia the next day to help prop up the sale, one fund manager said after he was invited to join the sale at the weekend. But UBS informed fund managers yesterday morning that the deal would not proceed because of a technical matter. It did not elaborate and give a timeline for a relaunch. A source close to the transaction said the sale was cancelled after an objection from Beijing, which thought it was not the right time for a sell-down. 'It is really embarrassing for the [State Administration of Foreign Exchange] as the Chinese government body just bought shares in the A-share market for the mainland banks to support the sluggish stock market,' said the source. Bank of America, the biggest US bank by market value, earlier this month boosted its stake in CCB to 19.13 per cent from 10.8 per cent. It paid HK$45 billion for 19.58 billion H shares, at HK$2.31 per share, from CCB's largest shareholder, Central Huijin Investment. 'A share sale on the Hong Kong market will more or less dilute Huijin's A-share holdings,' said Guotai Junan Securities analyst Wu Yonggang. Another source said: 'There is another rumour saying that the [China Securities Regulatory Commission] called UBS and wanted the deal pulled because there was a disagreement on some legal matters.' Bank of America, before looking at an open market sale, tried to sell a 3 per cent stake to domestic institutional investors including sovereign wealth fund China Investment Corp for about HK$3.10 a share, a source said. That failed because the domestic investors feared criticism that they would be buying state-owned assets on the cheap. UBS had told investors that they could place orders with an indicative price valuation equal to a 10 to 15 per cent discount to CCB's closing price on Friday, fund managers said. Shares of CCB dropped 2.4 per cent on news of Bank of America's potential placement. Sources said the US bank's move embarrassed Chinese officials because it would dash their hopes for a rally of banking stocks. 'It was obviously a political task for Huijin to raise its A-share holding of CCB, to bolster investor confidence and stabilise the moribund stock market,' said a banking source. 'CCB's profit next year is actually at stake as we forecast a 15 per cent year-on-year earnings drop for 2009.'