In 2005, Bank of America (NYSE: BAC) bought a 9% stake in China Construction Bank, the second largest bank in China. The investment amounted to about $3 billion. The deal created a strategic relationship, with Bank of America providing its expertise on consumer banking, credit cards, risk management and so on.

With the continued growth in China, the deal has worked quite well. Actually, this week Bank of America announced that it is upping its stake to 10.8%. This means that the company had to write a check for $1.86 billion, even with a juicy 64% discount on the share price.

MAJOR PAPERS:

• Private equity firm Corsair Capital and several of the banks bigger shareholders are expected to inject over $6B into Cleveland regional bank National City Corporation (NYSE: NCC), the Wall Street Journal reported.
• According to sources, the Financial Times reported that Bank of America Corporation (NYSE: BAC) is planning to sell a portion of its 9% stake in China Construction Bank in order to raise capital. However, Bank of America will offset some of the share sales by exercising options it holds to buy additional stakes in the bank at levels that are now well below market rates.

• The UK Times said The Royal Bank of Scotland Group Plc (NYSE: RBS) confirmed that it is considering a rights issue that is expected to raise up to GBP10B for the British bank.
• The UK Telegraph reported that the BBC is talking to private equity firms to join in a bid for Virgin Media Inc's (NASDAQ: VMED) Virgin Media Television, which owns a percentage of the UKTV content business that the BBC doesn't already own.

The Shanghai Composite is up 210% during the last year. Obviously, it is not a bad place for a company to list its stock. All the shares have to do is keep up with the index and everyone should be happy.

China's second largest bank, China Construction Bank, sees things that way. It will list on the Shanghai Stock Exchange, perhaps as early as this month. The financial company wants to raise $7.8 billion.

The bank already trades in Hong Kong, but "of the 44 shares that are listed on both the mainland and Hong Kong, the Shanghai shares trade at 46% premium to their Hong Kong counterparts," according to a report on MarketWatch. That does not make much sense, but its is certainly an incentive for Chinese stocks listed on the Hong Kong Hang Seng to list in Shanghai as well.

At some point IPOs of this size may be a challenge in China. The liquidity may not be there to fund them. But, right now, that days seems a long way off.