Summary
Bank of America Corporation (BAC) announced on November 14, 2011, an agreement to sell approximately 10.4 billion common shares of China Construction Bank Corporation (CCB) to a group of investors. This significant divestiture is expected to yield approximately $6.6 billion in cash proceeds for BAC. The transaction is anticipated to result in a pre-tax gain on sale of about $2.9 billion, and an after-tax gain of approximately $1.8 billion. Upon completion of this sale, Bank of America's stake in CCB will be reduced to roughly 1% of the outstanding shares. The company anticipates closing these transactions in November 2011, subject to customary closing conditions. This move is also expected to bolster BAC's capital position, increasing its Tier 1 common capital by approximately $2.9 billion under Basel I rules, and its Tier 1 common capital ratio by about 24 basis points.
Key Highlights
- 1Agreement to sell approximately 10.4 billion shares of China Construction Bank (CCB).
- 2Expected cash proceeds of approximately $6.6 billion from the sale.
- 3Anticipated pre-tax gain on sale of approximately $2.9 billion.
- 4Estimated after-tax gain of approximately $1.8 billion.
- 5Reduction of BAC's ownership in CCB to approximately 1%.
- 6Sale expected to close in November 2011.
- 7Projected increase in Tier 1 common capital of approximately $2.9 billion (Basel I) and a 24 basis point increase in Tier 1 common capital ratio (Basel I).