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Bank Of America Capital Scramble Continues With Alleged Closure Of China Construction Bank Stake Sale

Tyler Durden's picture




 

We are not sure how this is news, since it was announced weeks ago, but according to CNBC the bank that did not need capital, is following up yesterday's $5 billion capital raise with another $10 or so billion by selling "at least half of its 10% stake in CCB." That said, back on August 11, the FT came out with a report titled, "BofA faces struggle to sell CCB stake" in which we learn that "Bank of America is facing difficulties in selling its 10 per cent stake in China Construction Bank, partly because potential investors are expecting a deluge of rights issues, share sales and new listings from Chinese banks. But it might now raise less than than it had hoped. The BofA stake, once valued at $20bn, is now believed to be worth several billion dollars less, according to bankers. The US bank has approached sovereign wealth funds and other investors in the Middle East and in Asia, according to people familiar with the matter. The Kuwait Investment Authority was one potential buyer BofA approached, these people add, but the sovereign wealth fund already holds large stakes in ICBC and Agricultural Bank of China. “Right now, the KIA does not want to do anything more,” says one person with knowledge of the matter. “They think they have enough exposure to Chinese banks.” The KIA expects the two banks in which it already has shares to launch rights offers and the KIA intends to support those banks. "They will only look at CCB if the discount is high enough,” the person added...Potential buyers say the timing for BofA is particularly sensitive because, if CCB does launch a rights offer – as is widely expected – and BofA is still a main shareholder, it will be obliged to participate, using capital it can ill afford to part with." Stated otherwise, this must be one of those, "this time it's different" occasions. Next up: Bank of America does not, repeat NOT, need to sell its employee's blackberrys, but it will. Just because.

 

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Fri, 08/26/2011 - 12:21 | 1604576 tawdzilla
tawdzilla's picture

We don't need anymore capital! We don't need anymore capital!  Ehh, we need more capital (bitchezz.) 

Fri, 08/26/2011 - 12:22 | 1604597 dlmaniac
dlmaniac's picture

"We don't need to shore up no capital" BAC sounds so pre-Bear-Stearns and pre-Lehman.

Fri, 08/26/2011 - 12:23 | 1604609 tekhneek
tekhneek's picture

They don't need capital! They just want to pay more dividends? and hire more customer service representatives...? After all, they are all about customer satisfaction and stability?

Fri, 08/26/2011 - 13:26 | 1604794 DaveyJones
DaveyJones's picture

it's not denial, they're just selective about their reality

Fri, 08/26/2011 - 12:18 | 1604578 RobotTrader
RobotTrader's picture

 

 

No doubt the pressure is on Moynihan.

If he doesn't do something to get the Heatmappers to jump on BAC, then Warren Buffet will have to drag "Bathtub Becky" back into the tub for yet another "rub and tug"...

I can just picture that pasty white Becky with her hair halfway hidden over her eyes playing with Warren's stiffie trying to get him into the "Clouds and the Rain".

LOL....

Fri, 08/26/2011 - 12:30 | 1604631 slewie the pi-rat
slewie the pi-rat's picture

great first post from the office after a hard commute w. the blow-up doll in the diamond lane?

Fri, 08/26/2011 - 12:48 | 1604682 JW n FL
JW n FL's picture

L.A. is like New York during the summer.. only the help is left behind to suffer the elements.

Fri, 08/26/2011 - 12:30 | 1604633 Vergeltung
Vergeltung's picture

ewwww, gross!

 

Fri, 08/26/2011 - 12:18 | 1604579 Cognitive Dissonance
Cognitive Dissonance's picture

Looks like BAC, who said they needed no new capital, is getting more new capital. I love full frontal corporate nudity.

Fri, 08/26/2011 - 12:20 | 1604589 Irish66
Irish66's picture

"will take the market the usual several hours to figure out"

Fri, 08/26/2011 - 12:22 | 1604601 --Freedom--
--Freedom--'s picture

I really don't get it. So, On this news BAC soars 3% or so. Does anyone think this means they are actually in good shape, or are traders just betting on some form of bailout that keeps them alive long term?

Fri, 08/26/2011 - 12:53 | 1604699 Irish66
Irish66's picture

deal to close Monday..damn they are quick

Speed reading, I guess

Fri, 08/26/2011 - 12:24 | 1604611 traditionalfunds
traditionalfunds's picture

Have to admit this leak was well played by BofA IR. 

 

This sale does not appear to be a sign of desperation like the Buffett giveaway. Knowledge of it has been out there for quite some time.

 

Still waiting to see how it is priced vs market for signs of BAC weakness. And who the suckers buying it will be.

Fri, 08/26/2011 - 12:24 | 1604613 Boilermaker
Boilermaker's picture

I have to give a golf clap to the grotesque amount of fraud happening today, though.  Seriously, I hate these SOB's more than anything else on the earth...but, this is some seriously epic and world-class fraud today.  You have to hand it to them.  They really know their shit.

Fri, 08/26/2011 - 12:25 | 1604615 topcallingtroll
topcallingtroll's picture

May they die a long slow horrible death.

Fri, 08/26/2011 - 12:25 | 1604617 Spitzer
Spitzer's picture

Buffets investment will turn out wrong in the long run, its a grantee.

Fri, 08/26/2011 - 14:38 | 1605068 Shocker
Shocker's picture

Not his money anyways :)

Fri, 08/26/2011 - 12:28 | 1604625 slewie the pi-rat
slewie the pi-rat's picture

so what?  there really is nothing to see here, but a bank doing some liquidation, as per the farce we call:  American Justice

the political fix is in on the legal liabilities, i wld surmise or buffett wouldn'ta playa'd up the do-re-mi

BAC got "screwed" by paulson et al, so now they get a compensatory break from the criminals who control the "justice" system

welcome to america, BiCheZ!

Fri, 08/26/2011 - 12:30 | 1604632 TradingJoe
TradingJoe's picture

Where I come there's a say: A watter bottle can only go to a slippery well until it breaks! What we  keep seeing since 2007-2008 is going to end one day, and it will be THE END of The Society as we know it now! It does not matter how Much longer it can/may take but the innevitable is the same, total destruction of everything and anything, survivers? Very FEW and they won't be rich!

Fri, 08/26/2011 - 12:59 | 1604717 Herman Strandsc...
Herman Strandschnecke's picture

Where I come from they say 'Butter Fingers'.

Fri, 08/26/2011 - 12:31 | 1604634 DefiantSurf
DefiantSurf's picture

just get it over with, this is like watching a bad chic flic...it feels like its never going to end, but you know it will

 

Fri, 08/26/2011 - 12:51 | 1604692 Seasmoke
Seasmoke's picture

i guess you never watch Jennifer Aniston, her bad chic flics all morph together and they just keep coming and coming and coming

Fri, 08/26/2011 - 12:34 | 1604647 props2009
props2009's picture

Apple moves up 2.2% to 383. The apple trade was unvelied on Aug 25.

 

20% trade with 3% VaR.

 

Read premium trade of Apple at":

http://capital3x.com/?p=234

 

Apple trade charts

http://capital3x.com/?p=243

Fri, 08/26/2011 - 12:35 | 1604648 props2009
props2009's picture

Apple moves up 2.2% to 383. The apple trade was unvelied on Aug 25.

 

20% trade with 3% VaR.

 

Read premium trade of Apple at":

http://capital3x.com/?p=234

 

Apple trade charts

http://capital3x.com/?p=243

Fri, 08/26/2011 - 12:46 | 1604675 Overpowered By Funk
Overpowered By Funk's picture

Here you go - hope this helps http://finance.yahoo.com/ 

Fri, 08/26/2011 - 12:37 | 1604654 FreeNewEnergy
FreeNewEnergy's picture

I have a $400 check sitting on my desk, drawn on BofA. Should I just deposit it or run to a BAC branch and demand cash?

I'll probably take my chances that it clears by Monday, or maybe Tuesday or later, depending on Irene. Besides, I hate the stench of burning money in those BAC branches.

Hmmm... maybe a drive-through window...

Full disclosure: BAC SUX.

Fri, 08/26/2011 - 12:43 | 1604667 1000yrdstare
1000yrdstare's picture

So...should I pay off my BofA 10,000 credit card debt?

Fri, 08/26/2011 - 13:01 | 1604722 FMR Bankster
FMR Bankster's picture

No reason to. You heard the reports on CNBC. They are flush now. Anyway, if you have done business with them you should be aware they are so screwed up it's 50/50 they will forget you owe them the money.

Sat, 08/27/2011 - 14:05 | 1607651 Antipodeus
Antipodeus's picture

You could always offer them 2 cents in the dollar?  Fair's fair.

 

Fri, 08/26/2011 - 12:46 | 1604673 JW n FL
JW n FL's picture

 

 

New item in your series of interest:

Working Paper No. 11/208: Global Economic Governance: IMF Quota Reform

Author/Editor: Virmani, Arvind Summary:

The paper examines the principles on which a reform of a Quota based global economic institution like the IMF must be based, taking account of both the relative economic power of countries and the need for voice and representation of the poor countries.

These principles are then used in the context of the global economic realities of the 21st century to examine the suitability of different variables in the IMF.s Quota formula.

Based on this analysis a simple transparent formula is suggested, which will help increase the credibility and legitimacy of the IMF as a global macroeconomic and financial institution.

http://www.imf.org/external/pubs/cat/longres.aspx?sk=25198.0

Fri, 08/26/2011 - 12:48 | 1604674 unununium
unununium's picture

I suspect yesterday was a $10B capital raise.  BAC gets to issue $5B in new shares to satisfy the warrants when exercised.

Warren probably exercised them yesterday and sold the shares into the market for a profit.  Presto change-o, capital raise without that pesky secondary process and its attendant "quiet period" and all the other red tape.

Fri, 08/26/2011 - 13:14 | 1604758 NotApplicable
NotApplicable's picture

Will be interesting to see if that is the case. Even more so, watching him explain it.

Fri, 08/26/2011 - 12:47 | 1604681 unionbroker
unionbroker's picture

selective amnesia i don't remember seen that news before news before news before

Fri, 08/26/2011 - 12:54 | 1604701 monopoly
monopoly's picture

Do I hear a clock ticking. Getting closer.

Fri, 08/26/2011 - 12:56 | 1604706 MoneyWise
MoneyWise's picture

Gash, so many paranoiacs on this board, I have My money in BAC
as well, no problems, no worries. BAC is fine..
WE got Market Rally today, Told ya previous Q GDP would be revised
upwards. f* doomsters!!!!!

Fri, 08/26/2011 - 14:00 | 1604908 Panafrican Funk...
Panafrican Funktron Robot's picture

Curious how you managed to log on to the internet, let alone post.

Fri, 08/26/2011 - 12:57 | 1604712 Atlantis Consigliore
Atlantis Consigliore's picture

whats the song:

 

just a gigalo, everywhere I go,

getting the preferred i want it....

I aint got no body, NO Nobody......

 

move on, no one is watch da Craimer,  and his calls.

Bathtub Becky.....I Lov date.

send it to the Washingmachine Regulators.  

 

 

 

Fri, 08/26/2011 - 13:37 | 1604836 rufusbird
rufusbird's picture

"The US bank has approached sovereign wealth funds and other investors in the Middle East..."

A few of their large investors from N. African countries are distracted right now...

Fri, 08/26/2011 - 14:00 | 1604906 PulauHantu29
PulauHantu29's picture

Greater Sucker Theory:

 

The greater fool theory (also called survivor investing) is the belief held by one who makes a questionable investment, with the assumption that they will be able to sell it later to "a greater fool"; in other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else at an even higher price.[1]

It is similar in concept to the Keynesian beauty contest principle of stock investing.

 

http://en.wikipedia.org/wiki/Greater_fool_theory

 

 

Fri, 08/26/2011 - 14:43 | 1605089 economists_do_i...
economists_do_it_with_models's picture

This reminds me so much of *NATIONAL CITY*.  Screaming how they had TONS of Tier-1 capital.  No danger of failure.  While behind the scenes, their scum-bag CEO was working out a deal with PNC to parachute into a lucrative VP job.  They lied day after day about their financial state.  Same with Wachovia.  Loaded with toxic assets.  Their CEO crying about how they were getting treated unfairly with all of the selling pressure.

I'm guessing that BAC is *FAR* worse off than National City or Wachovia ever was.  Already scrambling for capital.  NCC had a big stake in Visa.  There was never talk of them selling that to raise cash -- where-as BAC is actively shoppiing it's China Construction Bank position -- practically pleading for a buyer.

Buffet hops on board, but only b/c the terms of the deal were impossibly sweet.  It's not like he just went out and bought the stock quietly on the open market.  Aren't those guys normally secretive in their buying.  Always refusing to comment on their holdings until they are forced to release them??  Ya.  When they announce their buying, it seems like it's a last ditch attempt to prop things up.  Like that Middle East dude who bought a bunch of Citi and then it plunged much lower after.

Anything involving BAC is absolutely rotten to the core.  They are like a dead tree.  Still standing -- great place for an old owl like Buffet to stop for a rest -- but destined to come crashing to the ground.  Just a matter of when...

In my humble opinion, I see something like nationalization happening at some point down the line.  Shareholder value wiped out.  Then they will sell off the pieces at pennies on the dollar to JPM, GS, et al and make the tax payers absorb the loss.

Fri, 08/26/2011 - 18:32 | 1605953 Scalaris
Scalaris's picture

Why don't they just pass the tray around billionaires row and have each of them take their 6% pref share divi IOU receipt from the block? Problem solved.

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