So this week, Bank of America (NYSE: BAC) agreed to exercise its option to double its position in China Construction Bank (CCB), which is the #3 financial institution in China. The stake comes to about 19.1%.

Keep in mind that Bank of America got a sweet discount on the option. Thus, the position is in-the-money - the investment has tripled in value to $14.5 billion -- and it may be tempting for the firm to start dumping shares. In fact, shares of China Construction Bank have taken a hit because of the this possibility.

And, as for Bank of America, it could be a savvy move. Of course, the firm had to slash its dividend and must integrate the huge acquisitions of Merrill Lynch (NYSE: MER) and Countrywide. At the same time, Bank of America's stock price continues to deteriorate. So, bagging a couple extra billion is probably a good bet right now.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Bank of America doubles down on China originally appeared on BloggingStocks on Tue, 18 Nov 2008 18:03:00 EST. Please see our terms for use of feeds.

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.

Continue reading Bank of America doubles down in China

Bank of America doubles down in China originally appeared on BloggingStocks on Wed, 28 May 2008 11:18:00 EST. Please see our terms for use of feeds.

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.

Newspaper wrap-up: National City expected to receive $6B-plus capital infusion originally appeared on BloggingStocks on Mon, 21 Apr 2008 08:57:00 EST. Please see our terms for use of feeds.

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.

IPO for China Construction Bank originally appeared on BloggingStocks on Wed, 05 Sep 2007 12:50:00 EST. Please see our terms for use of feeds.