Bank of America Corp. plans to raise its stake in China Construction Bank Corp. by exercising part of an option, to boost its stake to 10.75 percent from 8.5 percent, the Chinese bank said on Wednesday.
Bank of America, will purchase about 6 billion H shares for about HK$2.42 a share, or HK$14.5 billion ($1.8 billion USD). The trade will be finished on June 5. The 6 billion new shares may not have been sold until 2011 without the company's agreement.
Bank of America in 2005 invested $3 billion to hold a 8.75 percent stake in China Construction Bank, China's second-largest bank, and has the option to raise its holding to 19.9 percent through 2010.
While the market value of the stake has come to $14.5 billion as of March 31, rising fourfold from its initial investment, analysts speculate that Bank of America would sell part of China Construction shares to boost its capital loss.