bank of america stock falls on denial of ccb sale
Last Updated : GMT 16:22:18
Arab Today, arab today
Arab Today, arab today

Bank of America stock falls on denial of CCB sale

Arab Today, arab today

Arab Today, arab today Bank of America stock falls on denial of CCB sale

London - AFP

Disappointment that Bank of America would not jettison its entire $17 billion stake in a major Chinese bank in order to boost its own capital sent its shares tumbling Tuesday. BofA shares dropped nearly two percent -- against an overall rally in stock markets -- after news came out that it would maintain a large stake in China Construction Bank (CCB). Investors hoping BofA will sell off assets to strengthen its capital base were put off by comments from CCB's chairman that it would retain at least half of its 10 percent stake of the Chinese lender, analysts said. "We think Bank of America will be a long-term strategic partner and important shareholder," Guo Shuqing, chairman of the government-controlled bank, told reporters in Beijing on Monday, quoted by Dow Jones Newswires. BofA's stake in CCB is worth about $17 billion, based on the Chinese bank's latest Hong Kong share price, and investors had speculated the stake would be sold to help shore up BofA's finances. "Investors worry that if BofA keeps some part of CCB, it will be more likely to need to raise capital down the line," said David Evanson, an analyst with Canaccord Genuity. Bank of America's stake in CCB "would go a long way toward plugging whatever capital holes BofA has," Evanson added. The news sent the US banking giant's shares falling 5.6 percent before they recovered for a 1.9 percent loss for the day to $6.30. BofA shares have plunged more than 50 percent since the year began, making it the worst performer of the 30 blue-chip companies on the Dow Jones Industrial Average. The Wall Street Journal, citing an anonymous source, reported Tuesday that Bank of America was talking about a partial sale of its CCB stake with potential buyers, including Middle East investment funds. However, the bank has not publicly disclosed any plans to sell its CCB stake and insists that it is sufficiently capitalized. The largest US bank in terms of deposits has struggled to recover from the 2008 financial meltdown and a legacy of issuing bad mortgages in the run-up to the crisis. It posted a $9.1 billion loss in the second quarter, mostly caused by a huge $8.5 settlement to resolve claims stemming from its issuance of mortgage-backed securities that went bad during the financial crisis. Lately it has also been buffeted by questions over its exposure to Europe's sovereign debt crisis.

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bank of america stock falls on denial of ccb sale bank of america stock falls on denial of ccb sale

 



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