* CCB shares offered at discount of up to 5.1 pct to
* BofA exit comes after lock-up on CCB stake expired last
* Sell-down marks end of ties with CCB that started in 2005
By Elzio Barreto and Denny Thomas
HONG KONG, Sept 3 Bank of America Corp
launched on Tuesday an up to $1.5 billion share offering in
China Construction Bank Corp (CCB), exiting an
eight-year investment in China's second-biggest lender in a bid
to shore up its own balance sheet.
The U.S. bank is offering 2 billion Hong Kong-traded shares
of CCB in a range of HK$5.63 to HK$5.81 each,
according to a term sheet of the deal seen by Reuters. The price
is equivalent to a discount of up to 5.1 percent to Tuesday's
close of HK$5.93.
The deal follows a massive cleanup in Bank of America's
balance sheet in recent years, worth about $60 billion, from the
sale of non-core investments as chief executive Brian Moynihan
tries to boost the bank's capital ratios. The sale also comes
about two years after the bank raised a combined $14.9 billion
from selling shares in CCB to a group of investors that included
Singapore's Temasek Holdings.
Bank of America unveiled an initiative in 2011 aimed at
saving $8 billion a year. The Charlotte, North Carolina-based
bank joins a list of Western banks that have cut their ties with
Chinese financial firms in recent years.
Many of the investments by the U.S. and European banks were
made as the big Chinese lenders were preparing for their market
debuts nearly a decade ago. While the relationships were
profitable and helped Chinese lenders become some of the world's
biggest banks, few products or strategic benefits emerged.
Bank of America's investment in CCB dates to 2005 when it
paid $3 billion for a 9.9 percent stake in the Chinese bank
before its initial public offering.
At the time, then Bank of America chief executive Kenneth
Lewis said the partnership was designed to give the bank
increased access to roughly 1.3 billion Chinese consumers, while
CCB would benefit from Bank of America's U.S. retail banking
The U.S. bank increased its holdings in following years to
25.6 billion shares, before paring it down as it focused on
bolstering its capital base. Bank of America launched Tuesday's
sale after a lock-up on its remaining stake expired last month.
The sale also comes at a time when bad loans at Chinese
banks are showing signs of a pick up as the economy loses steam
after several years of strong growth. As a result, several
Chinese lenders are preparing to launch equity sales to bolster
their capital base.
Earlier this year, Goldman Sachs sold out of its
seven-year investment from Industrial and Commercial Bank of
Some foreign banks continue to hold on to their investments
in Chinese lenders. Among them are HSBC Plc, which owns
a 19.9 percent holding in China's Bank of Communications Co Ltd
and Spain's BBVA's has a 15 percent stake in China
Citic Bank Corp Ltd.
CCB shares are down 4.7 percent since the beginning of the
year in Hong Kong, outperforming the 9 percent decline in the
financial sub-index of the Hong Kong stock exchange in