Bank of America sells stake in Chinese bank

A man uses an automated teller machine in front of a branch of Bank of America in Hollywood, California.

Jeremy Hobson: Bank of America has just taken a drastic step in search of cash. It is selling much of its stake in the China Construction Bank, which gave BofA a way into the fast-growing Chinese real estate market.

Marketplace's Eve Troeh reports.


Eve Troeh: Bank of America needs cash -- fast. $50 billion to convince investors and international regulators that it's strong. So, it's been selling assets -- like its credit card business in Canada and Europe. And now billions of shares in China Construction Bank. That gets Bank of America more than $3 billion closer to its goal.

Arthur Kroeber at Dragonomics research in Beijing says even though it was a fire sale, they got a good deal.

Arthur Kroeber: It's very unlikely that China Construction Bank's stock price is going to be much higher two, or three, or five years from now.

That's because Chinese banks have been lending a lot in recent years. Eventually they'll need to show more capital, the way Bank of America has to do right now. That could limit growth.

BofA still holds 5 percent of China Construction Bank, and plans to continue what both are calling a strategic partnership. But Kroeber says the Chinese bank hasn't treated BofA like much of a partner since it bought in -- it seemed to mostly just want the money. And there are now plenty of other investors willing to provide that.

I'm Eve Troeh for Marketplace.

About the author

Eve Troeh is News Director at WWNO-FM in New Orleans, La., helping build the first public radio news department in the station’s 40-year history. She reported for the Marketplace Sustainability Desk from 2010 to 2013.

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