US bank to exit CCB in US$1.5b share sale

Bank of America yesterday launched a US$1.49 billion share sale in China Construction Bank to offload its entire stake in China's second-largest bank by market value.

Exiting its eight-year investment, Bank of America is offering its remaining two billion Hong Kong-listed shares in Construction Bank for HK$5.63 to HK$5.81 each - a discount of up to 5.1 per cent to the stock's closing price yesterday.

The move follows that of Goldman Sachs, which sold its entire stake in Industrial and Commercial Bank of China in May, and HSBC, which sold US$9.4 billion of Ping An shares in February.

The increasingly stringent capital requirements overseas and a slowdown in China are the main reasons for the exit of foreign financial institutions from mainland banks, analysts said.

A Hong Kong-based spokesman for Bank of America declined to comment, while calls and e-mail queries to Construction Bank went unanswered.

Shares in Construction Bank rose 1.89 per cent to close at HK$5.93 yesterday before the term sheet for the share sale was released. The stock has gained 8 per cent since July, outperforming the Hang Seng Index's 7.6 per cent advance.

Construction Bank chairman Wang Hongzhang had said last month he hoped Bank of America would retain its remaining stake of 0.8 per cent.