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.