BofA buys into CCB
by Brian Turner
It will be announced in Beijing on Friday that Bank of America has agreed to purchase a 9 percent stake in China Construction Bank for approximately $2.5 billion.
BofA is also expected to invest $500 million more in CCB’s upcoming initial public offering.
In return for its purchase, the largest foreign investment in the Chinese banking sector to date, BofA is expected to receive one seat on CCB’s board.
CCB has been looking for a foreign investor for some time, but the search has been complicated by the reluctance of foreign companies to invest in Chinese banks over concerns about bad debts, corruption, and management issues.
Also at issue has been the large size of investments required, with very little return in terms of having a say in management.
Several international banks are thought to have been approached by CCB about buying into the bank before its IPO.
Bank of America has been looking for further growth opportunities overseas after it bought a 25 percent stake in Mexican bank Grupo Financiero Santander Serfin in 2003. BofA currently generates only 6 percent of its revenues outside the US.
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