The bank that never, ever needs capital, but will dilute the living daylights out of anyone to get it, and will sell all of its actually valuable assets as soon as a buyer materializes, has just gone ahead and proven its critics right yet again. Several minutes ago Brian Moynihan's rotting carcass of toxic Countrwide Financial mortgages, which has some negligible banking businesses on the side, just announced it would sell about 10.4 billion common shares of China Construction Bank Corp through private transactions with a group of investors. The purposes of the follow up CCB disposition - to pump about $2.9 billion in additional Tier 1 common capital at Bank of America. And with this the easy disposition targets are gone. Next up: just how will Bank of America be able to spin off Merrill. Have fun with all those CDS successor issues. And once that phase is over, the debate over just how Bank of America will spin the hundreds of billions of legacy CFC contingency liabilities off into an "asbestos" trust will resume.
From the press release:
Bank of America Reaches Agreement to Sell Approximately 10.4 Billion Shares of China Construction Bank; Expects Pretax Gain of Approximately $2.9 Billion
Bank of America Corporation announced today that it has agreed to sell approximately 10.4 billion common shares of China Construction Bank Corporation (CCB) through private transactions with a group of investors. The sales are expected to generate an after-tax gain of approximately $1.8 billion.
The transactions are expected to close in November 2011, and are subject to customary closing conditions. Following closing, Bank of America will hold approximately 1 percent of the common shares of CCB.
“Our decision to sell the bulk of our remaining shares in China Construction Bank is consistent with our stated objective of continuing to build a strong balance sheet,” said Chief Financial Officer Bruce Thompson. “We expect this action, supplemented by the related realization of deferred tax assets, will generate approximately $2.9 billion in additional Tier 1 common capital and further strengthen our Tier 1 common capital ratio by approximately 24 basis points under Basel I.”
The strategic assistance agreement between Bank of America and CCB, which includes cooperation in specific business areas, remains in place.
The transactions were solely managed by Bank of America Merrill Lynch.