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Bank Of America Scrambles To Shore Up Capital: In Negotiations To Sell $17 Billion China Construction Bank Stake

Tyler Durden's picture




 

Bank of America is doing all it can to delay the inevitable equity issuance. Reuters has just broken the news that the bank is in active negotiations with Kuwait and Qatar sovereign wealth funds to sell its $17 billion China Construction Bank stake. There are several problems with this approach: first, the petrodollar sovereign wealth funds just lost over 20% of their AUM courtesy of the global equity rout and of the plunge in oil by more than 20% in less than 2 weeks; Second: everyone recalls what happened to Alwaleed when he bought his "Blue Light" citi stake; third: if BAC does indeed sell its CCB stake, it will leave it with zero disposable assets and will have no choice but to approach the equity market. Fourth, the fact that it needs this cash is validation of all the rumors that the bank's capitalization may be urgently strapped very soon, and that today's Berkowitz call was nothing but lies (in typical BAC style); last, since the final cash need when all is said and done, when all the litigation is over and when the NY AG is done with the bank, BAC will need far, far more cash than $17 billion. Which is why any BAC bounce in the AH session should be viewed very skeptically.

More from Reuters:

Bank of America Corp <BAC.N> has held exploratory talks with the principal investment funds of Kuwait and Qatar about selling part of its stake in China Construction Bank <0939.HK>, sources with direct knowledge of the talks told Reuters.

 

Bank of America, which owns about 10 percent of CCB's <601939.SS> Hong Kong-listed shares and is scurrying to raise capital for its mortgage-scarred balance sheet, will be contractually free to sell the bank shares after Aug. 29. They are valued at about $17 billion

 

The bank, the largest in the US by assets, is likely to sell half its stake in order to shore up its Tier 1 capital. Analysts believe Bank of America needs about $50 billion to meet new capital requirements

 

Talks about the Chinese bank have been held with other investors in addition to the Kuwait Investment Authority and the Qatar Investment Authority, the sources said

 

It is unclear if any agreement with the sovereign wealth funds or other investors have been cemented.

 

Bank of America, whose shares have fallen 20 percent in the past week, did not mention the China investment during a widely followed conference call that top executives held Wednesday with thousands of investors. Chief Financial Officer Bruce Thompson said on the call that asset sales are being considered to boost capital.

 

"These stakes will be sold eventually," one source said of the Chinese bank shares. "They have been shown previously to funds who matter."

For those who are actually confused what this news means, this is precisely what Lehman started doing a few months ahead of its own bankruptcy filing.

We look forward to one of two outcomes: i) the spin off of CFC (to the Fed and/or the GSEs), making BAC less than TBTF, or ii) the implosion of the entire monolith. At least the company's Bryant Park NY HQ should fetch about $0.25 per share.

 

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Wed, 08/10/2011 - 16:57 | 1548348 aVian
aVian's picture

please go bankrupt...I get a free house

Wed, 08/10/2011 - 17:04 | 1548407 Pladizow
Wed, 08/10/2011 - 17:25 | 1548515 MarketTruth
MarketTruth's picture

Tyler, i did e-mail this to you a few hours ago:

BofA Sells Part of Mortgage Portfolio to Fannie Mae

Bank of America Corp. has agreed to sell part of its home-loan portfolio to government-controlled housing giant Fannie Mae, as the bank looks to shed assets and pare its exposure to an array of mortgage woes.

The deal, finalized last Friday, will deliver the rights to process and collect payments on a pool of 400,000 loans with an unpaid principal balance of $73 billion, people familiar with the deal said. The purchase price is more than $500 million, one...

http://online.wsj.com/article/SB10001424053111904007304576498793010276516.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Wed, 08/10/2011 - 18:03 | 1548666 Use of Weapons
Use of Weapons's picture

Riiight.

So the US government now owns X thousand mortgages?

 

And the USA pretends it doesn't "do" socialism or state owned housing projects (outside of the ghetto)?

 

Riiight.

Wed, 08/10/2011 - 18:33 | 1548816 Fish Gone Bad
Fish Gone Bad's picture

I swear I could hear Fascist Bank of America crying, even from where I live.  I took a look outside.  It was only someone's belt squealing on their POS car.

Wed, 08/10/2011 - 18:38 | 1548833 Freddie
Freddie's picture

I want to go to my local Bank of (Many Illegal Aliens in) of America and piss all over their front door at night. 

All their collateral is in the back of a pickup headed to Mexico on mtgs, credit cards and auto loans to illegals.

F*** Banco de America.

Wed, 08/10/2011 - 23:33 | 1549737 cowdiddly
cowdiddly's picture

You mean European mortgages. This is a derivatives timebomb from Europe, mostly France. And, our sorry assed politicians took out any meaningful reform from Dodd Fwank sellout and there is still 850 TRILLION with a T, of these WMD that the banks are still exposed to and still playing with. Now we have the Bear Stearns moment part 2 European version.  We do not have the money to bail out  the entire financial system again without destroying the dollar. With Obama picking grapes and congress touring Israel their motherland. We Are PHUCKED and going down this time hard. I hope to see everyone on the other side, the excrement is starting to hit the fan blades. 

Wed, 08/10/2011 - 18:26 | 1548778 MsCreant
MsCreant's picture

This needed editing, I have gone to the trouble to correct the text of the posted excerpt:

 

BofA Sells Sack of "Empty Boxes" (AKA Unsecuritized SHIT) to The United States

Bank of America Corp. has agreed to sell the non performing part of its home-loan portfolio to government-controlled housing giant Fannie Mae (which is already loaded down with underperforming and unsecuritized shit), as the bank looks to shed assets and pare its exposure to an array of mortgage woes.

The deal, finalized last Friday, will deliver the rights to process and collect payments on a pool of 400,000 toxic loans with a never to be paid principal balance of $73 billion, cocksuckers familiar with the con said. The purchase price is more than $500 million, one...

Wed, 08/10/2011 - 18:37 | 1548825 Fish Gone Bad
Fish Gone Bad's picture

Contrary to opinion, most articles are greatly improved with four letter words.  Bank of America really should have been called Piece of Shit Bank of America and Fannie Mae should have been called cocksucking Fannie Mae.

Wed, 08/10/2011 - 20:52 | 1549353 Taku
Taku's picture

Why is BAC still around?

Oh, right, had to bail out the bankster elites.

Using taxpayer money.

YOUR money.

They still aren't in jail, are they?

Now that they've cashed out, and left you holding the bag, they'll let her fail this time.

To be cleaned up with, you got it, your taxpaying dollars.

Wed, 08/10/2011 - 20:34 | 1549273 Yes_Questions
Yes_Questions's picture

rights to process and collect payments on a pool of 400,000 loans

Collect payments?

Haaaaaaaaaahahahahahaaha!

Process write offs is more like it.

 

Wed, 08/10/2011 - 17:29 | 1548533 Breaker
Breaker's picture

"please go bankrupt...I get a free house"

Careful with that. Michael Milken might do a hostile BOFA takeover and then sell off your mortgage to an organization that can actually do foreclosures correctly :)

Wed, 08/10/2011 - 17:56 | 1548634 darkstar7646
darkstar7646's picture

Or, worse, you get the door knocked down by Xe as they basically open the FEMA camps and start with the selective defaulters...

Wed, 08/10/2011 - 18:53 | 1548894 Hephasteus
Hephasteus's picture

Buy syringes. All sizes. From your local medicine store for people who have to take insulin and from your local vet for people who have to dope up bulls. You'd be surprised what a 100 cc syringe with the right household ingredients and needle that is visually stunning will make a guys ball sack look like. You can learn chemistry and physics. Which chemial makes his nuts purple. Which makes his nuts green.

Homeschooling. It's the wave of the future.

Wed, 08/10/2011 - 18:58 | 1548914 Transformer
Transformer's picture

You do not get a free house.  The story of what happened around failing banks in the 30's is not widely known.  A bank in the midwest would fail.  Say, a farmer who keeps his money in the bank, and has a mortgage on the farm with the same bank, loses all the money he had on deposit.  But his mortgage is bought by some other bankd for 5 cents on the dollar and that bank then comes after the farmer, foreclosing because the farmer can't operate without his funds and can't pay his mortgage.  This is why the people hated the banks, and loved the bank robbers like Bonnie and Clyde and Pretty Boy Floyd.

Wed, 08/10/2011 - 20:40 | 1549299 j0nx
j0nx's picture

My one credit card is with BoA and I have used it for staples and other equipment in the past 3 months and have no intention of paying it off if BoA fails. I will offer to pay the company who absorbs BoA the same percentage of the debt that they paid for BoA plus 3% for their trouble. That is only fair. If they don't like that deal then they get DICK. Why the F should I have to pay 100c on the dollar for it when they didn't? Screw that shit.

Wed, 08/10/2011 - 21:44 | 1549534 laomei
laomei's picture

because doing that is "immoral" according to most americans.  bank can pay jack shit for the debt, companies can "restructure" their debts and pay nothing... oh, but you the consumer had better pay every last dime plus interest and penalties or else!

Wed, 08/10/2011 - 17:54 | 1548624 johngaltfla
johngaltfla's picture

This is looking more and more like a STEARN BEAR is in the house....

Wed, 08/10/2011 - 18:25 | 1548765 NumNutt
NumNutt's picture

Same here! But alas, I suspect when this evil beast falls there will be several more behind it, that will pick the carcass clean, then direct you to start sending your money to them......

Wed, 08/10/2011 - 18:52 | 1548885 Freddie
Freddie's picture

BAC is a "buy." Paulson loves it and Bruce Berkenstein of Fairholme mutual fund loves BAC.

Wed, 08/10/2011 - 16:57 | 1548352 printmemoney
Wed, 08/10/2011 - 17:03 | 1548404 Ethics Gradient
Ethics Gradient's picture

GLD? Is that anything like gold?

Wed, 08/10/2011 - 17:16 | 1548480 Going Loco
Going Loco's picture

No. It isn't even spelled prperly. That was a clue which many missed.

Wed, 08/10/2011 - 17:26 | 1548518 william shatner
william shatner's picture

No, get the fysical stuff.

Wed, 08/10/2011 - 17:53 | 1548623 Robert Neville
Robert Neville's picture

I think it's short for gelding.

Wed, 08/10/2011 - 18:40 | 1548845 Freddie
Freddie's picture

GLD?  I think that spells tungsten wrapped in gold foil.

Wed, 08/10/2011 - 17:16 | 1548473 cossack55
cossack55's picture

Wow. I am now totally reassured. I'm buying some of that GLD stuff as soon as I don't pay my mortgage.  Man, gold I don't have to bury. Cool.

Wed, 08/10/2011 - 16:57 | 1548353 EscapeKey
EscapeKey's picture

GS got hammered today. Blowtorched, one might even say. 10% down, unbelievable that God's work go so unappreciated by.

Wed, 08/10/2011 - 17:00 | 1548381 dwdollar
dwdollar's picture

lol

Wed, 08/10/2011 - 17:07 | 1548432 dejapfc
dejapfc's picture

LOL

Wed, 08/10/2011 - 17:16 | 1548478 cossack55
cossack55's picture

Large increase in the Atheist trade.

Wed, 08/10/2011 - 16:57 | 1548358 bob_dabolina
bob_dabolina's picture

BAC = $3.50

Wed, 08/10/2011 - 17:04 | 1548405 Greater Fool
Greater Fool's picture

...and will be purchased by the Loch Ness Monster.

Wed, 08/10/2011 - 17:04 | 1548411 EscapeKey
EscapeKey's picture

What's that on a per share basis? I presume you speak of market cap.

Wed, 08/10/2011 - 17:28 | 1548512 bob_dabolina
bob_dabolina's picture

I presume it should be broken up. Bank of America is a piece of shit in it's current state, it's ugly.

I wouldn't have sex with a girl with herpes (in and around) her mouth area, and with scabs up and down her legs. That's what BAC looks like. You can touch it but I wouldn't recommend it. 

Honestly, I wouldn't even touch it @ $3.50 with Moynihans dick on a 10 foot pole; it's diseased.

Wed, 08/10/2011 - 17:29 | 1548538 nonclaim
nonclaim's picture

Bank of America is a piece of shit

TBTF: Too Big To Flush?

Wed, 08/10/2011 - 18:31 | 1548811 MsCreant
MsCreant's picture

With this simple, poetic, philosophical observation, you went right to the heart of the matter.

We are going to need a plan B. Take it out of the toilet by other means.

Wed, 08/10/2011 - 18:43 | 1548851 jomama
jomama's picture

who do you think you're kidding?

we all know you can't cop a woody without viagra.

Wed, 08/10/2011 - 18:48 | 1548865 Freddie
Freddie's picture

In BAC's case - the girl has herpes in her private area and anus including rectum.  

Wed, 08/10/2011 - 16:57 | 1548360 SilverDoctors
SilverDoctors's picture

Gonna be fun when this one (BAC) blows. 
I have a feeling we'll limp into the weekend, and BAC and SocGen will both be officially bailed out Sunday night before the Asian open

http://silverdoctors.blogspot.com/

Wed, 08/10/2011 - 17:19 | 1548490 Josh Randall
Josh Randall's picture

BAC to be burried at sea - they are already dead, you will have to take our word for it. Now on to eating peas...

Wed, 08/10/2011 - 17:31 | 1548546 Breaker
Breaker's picture

"BAC to be burried at sea - they are already dead, you will have to take our word for it. Now on to eating peas..."

Obama got BAC with the Seals. They're making a movie about it for release just before the election.

Wed, 08/10/2011 - 17:00 | 1548363 dwdollar
dwdollar's picture

Bove said they were 'well capitalized' the other day.

Wed, 08/10/2011 - 17:35 | 1548566 Agent P
Agent P's picture

Don't listen to Bove, he's a real Dick.

Wed, 08/10/2011 - 20:02 | 1549165 dwdollar
dwdollar's picture

He reminds me of 'The Architect' from The Matrix only much worse at math.

Wed, 08/10/2011 - 16:58 | 1548370 Withdrawn Sanction
Withdrawn Sanction's picture

Looks like BAC's been picked to be the patsy this go round.  Sorry about your net worth, Mr Moynihan.  Ouch.

Wed, 08/10/2011 - 16:59 | 1548374 gangland
gangland's picture

TYLER<

 

thas consistent with my bankruptcy thesis and what brian said today visavis selling non-core ASSSSSSSSS

Wed, 08/10/2011 - 16:59 | 1548378 Sofa King
Sofa King's picture

We now get to see exactly what a failure the Fr-Odd bill really is.

Wed, 08/10/2011 - 17:00 | 1548380 gangland
gangland's picture

 FUKIN AYYYYY!!!!!!!

call em on it!

Wed, 08/10/2011 - 16:59 | 1548379 Critical Path
Critical Path's picture

Just a matter of time until JPM absorbs all banking activity in the country.  $2 trillion in assests already, why not make it double.  What sort of discount do they aquire BAC's only good assets at?  Who gets forced to carry the baggage of Country Wide? oh, the tax payer? thanks...

Wed, 08/10/2011 - 17:03 | 1548398 Greater Fool
Greater Fool's picture

This is hugely bullish. BAC management evidently feels they can make it to August 29 without those extra billions.

Not sure everyone agrees....

Wed, 08/10/2011 - 17:05 | 1548414 dwdollar
dwdollar's picture

Oh yeah...  rally on for another week.  Forget about the inevitable.  It's won't be a problem unit it is a problem.

Wed, 08/10/2011 - 17:03 | 1548402 mynhair
mynhair's picture

Have a couple of BAC tellers here that would go for more.....just sayin'.

Wed, 08/10/2011 - 17:05 | 1548410 traditionalfunds
traditionalfunds's picture

Sell high BofA!

Those Chinese shares are gonna rapidly lose value.

Wed, 08/10/2011 - 17:05 | 1548418 sunnydays
sunnydays's picture

I love all the wonderful information today.

 

Including the shorts of metals have lost everything per a London trader, even the big guys!

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/8/10_Lo...!.html

 

Awesome News - Keep the Hits Coming!

Wed, 08/10/2011 - 17:07 | 1548433 Long-John-Silver
Long-John-Silver's picture

Here's something to laugh at.

 

Why It's Time to Sell Silver Stocks and Buy Bank of America

http://seekingalpha.com/article/267253-why-it-s-time-to-sell-silver-stoc...

 

This was written way back on May 3 2011.

Wed, 08/10/2011 - 17:19 | 1548489 cossack55
cossack55's picture

Looks like its time to switch to www.seekingbrain.com

Wed, 08/10/2011 - 17:29 | 1548537 sunnydays
sunnydays's picture

What  a Tool!

 

There are a few articles I would read there that I knew they were simply being made to write the bullshit for their masters.  You just have to laugh.  I wonder if anyone really did sell their physical to buy BOA?  If anyone has physical, they are normally much smarter and aware than 99% of the rest who may have listened to such bullshit.

Wed, 08/10/2011 - 23:06 | 1549714 Id fight Gandhi
Id fight Gandhi's picture

SA has really fallen down hard. The writers are generally clueless and most are just padding resumes. Only a handful are worth reading.

They get paid like $10 for every 1000 views.

Wed, 08/10/2011 - 19:16 | 1548988 Hephasteus
Hephasteus's picture

But they were going to buy something that makes them a lot of money. All the troubled banks were going to buy something that makes them a lot of money.

I hear that the elite are good problem solvers. They buy things that make them a lot of money.

http://wallstcheatsheet.com/economy/jim-cramer-and-thestreet-com-hit-low...

Wed, 08/10/2011 - 17:09 | 1548441 bbq on whitehou...
bbq on whitehouse lawn's picture

Kuwait and Qatar  can use any assets how ever poor to an advantage when dealing with china.

This is good news for Kuwait and Qatar but bad news for BAC.

Wed, 08/10/2011 - 17:16 | 1548474 caerus
caerus's picture

three words..."fortress balance sheet"

Wed, 08/10/2011 - 17:17 | 1548481 ReactionToClose...
ReactionToClosedMinds's picture

an aside ... hearing from biz colleagues  that there are a lot of scared (terrified) 'gov'ts' in MdlEast land ... throwing alot of dinero at social/public health goods/ services etc. to placate .....

When Ramadan ends .. well...

Wed, 08/10/2011 - 17:21 | 1548499 Cheesy Bastard
Cheesy Bastard's picture

Still my Qatar gently weeps.

Wed, 08/10/2011 - 19:02 | 1548931 fuu
fuu's picture

<golf clap>

Wed, 08/10/2011 - 17:20 | 1548494 Freewheelin Franklin
Freewheelin Franklin's picture

Hahaha. I thought the last two words of the title of the post said "Bake Sale". Seriously.

Wed, 08/10/2011 - 17:20 | 1548495 buzzsaw99
buzzsaw99's picture

STEMS AND SEEDS BAYBEE!

Wed, 08/10/2011 - 17:24 | 1548506 Greater Fool
Greater Fool's picture

Soon BAC will be smokin' wood.

Wed, 08/10/2011 - 17:44 | 1548595 buzzsaw99
buzzsaw99's picture

internal memo: All Bank of America employees will report to the Red Cross plasma center on Elm St. before reporting for work tomorrow.

Wed, 08/10/2011 - 18:34 | 1548820 nasa
nasa's picture

lol. 

Wed, 08/10/2011 - 18:40 | 1548841 jomama
Wed, 08/10/2011 - 18:53 | 1548892 Scalaris
Scalaris's picture

An equity fund manager was being interviewed yesterday morning on bloomberg and he was saying that there are some absolut bargains in the market trading for substantial discounts. He recommended BAC as one of them. I will believe NOTHING, other than what people who work in the financial sector tell me. Because they just know best.

Wed, 08/10/2011 - 19:08 | 1548956 jkruffin
jkruffin's picture

Ahem,  I thought they sold this unit in 2009?  Something seems fishy here............is this the same one or a different one?  I swear they either sold or tried to sell a China unit during the last collapse.

Wed, 08/10/2011 - 19:09 | 1548959 SPAREPARTS
SPAREPARTS's picture

stems and seeds, I like that

Wed, 08/10/2011 - 19:23 | 1549014 windcatcher
windcatcher's picture

 

 

-----------

The greatest fraud and robbery ever to unfold! It is truly amazing what the bankster have managed to do in just 10 years. In the end, the criminals skate out the backdoor with all the loot and nationalize the debt load.

 

One can only ask where did all the “money debt load” go? Let me see, by looking back in recent financial (political) history, how many trillions did the fascist banksters steal (taxpayers newly printed debt) in the last 10 years?

 

The GM maneuver, Fannie May and Freddy Mac maneuver, Tarp, QE 1 and 2, (3), Federal Reserve 40 trillion partial audit, no one know exactly how many trillions that they made off with or how much the taxpayer owes!

 

The fascist banksters and the New World Order knew they would win and not a precious traitor soul will be brought to Justice! Argentina was just a testing ground for the testing of their global terrorist financial weapon of mass destruction. Now it is America’s turn!

http://topdocumentaryfilms.com/argentinas-economic-collapse/

 

 

Perfect, now nationalize the debt! Perfect robbery! The fascist banksters with their puppet congress and globalist main stream propaganda media are so slick! Attorney General Holder, Geithner, Congress, Supreme Court and Obama deserve a well done and a vacation in Hell!

 

The crowd goes wild: “We don’t care, hurray for me; I have got my physical and screw the other guy!”

 

 

Wed, 08/10/2011 - 20:18 | 1549215 Buck Johnson
Buck Johnson's picture

BAC is about to go under.

Wed, 08/10/2011 - 20:30 | 1549256 SanOvaBeach
SanOvaBeach's picture

Everything is okay, Mr. Lewis.  You got out in time and your fortune is intact.  Fuck everybody else!  You got enough money to do wharever you want and to buy protection.  You don't have to practice "smiling" anymore either, since you got all the bread you need and don't have to play the game anymore.  Oh!  Remember that guy you fired from ML?  He is okay too!  He is real sorry he spent millions re-modeling his office at ML while he ran the company into the ground.  He does not regret handing out all those bonuses just before you took over either.  Anyway, it has been really fun!  Bye....................

Wed, 08/10/2011 - 20:41 | 1549305 WebWeasel
WebWeasel's picture

This has been the obvious outcome since the shotgun wedding to Countryfried. The rest of the TBTFs pick up the good bits and the government takes on the trash.

Wed, 08/10/2011 - 21:06 | 1549407 Deepskyy
Deepskyy's picture

But but but... Moynihan was on Blowhorn today assuring everyone that all was well and they did not need to scrounge up capital.

 

Liar Liar go Fuck yourself.

 

Wed, 08/10/2011 - 21:26 | 1549470 Seymour Butt
Seymour Butt's picture

Skank of America - it couldn't have happened to a "nicer" bank. 

Wed, 08/10/2011 - 21:42 | 1549526 laomei
laomei's picture

Welp, if BofA goes and does that, then I have zero reason to have an account.  BofA is only kept now simply because it's free to move some 4000 RMB per day on the CCB ATMS, otherwise it's huge fees and not worth it at all.  On an average year, I'll shuffle some $150k through that bank, not anymore it seems though and I'm fairly certain all others in China will join in the exodus as well.  Hasta.

Wed, 08/10/2011 - 22:09 | 1549594 grunk
grunk's picture

BOA = DOA

Thu, 08/11/2011 - 02:31 | 1549957 Dave Thomas
Dave Thomas's picture

And there you have it folks.

Wed, 09/14/2011 - 05:30 | 1667638 chinawholesaler
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