Bank Of America Sells 13.1 Billion Shares In China Construction Bank, Raises Another $8.3 Billion "It Does Not Need"

Tyler Durden's picture

Bank Of America continues to desperately raise firesale capital (which it most certainly does not need).

  • BANK OF AMERICA AGREES TO SELL 13.1B SHRS OF CHINA CONSTRUCTION
  • BANK OF AMERICA SEES SALE GENERATING $8.3B PROCEEDS
  • BANK OF AMERICA KEEPS 5% STAKE IN CCB
  • BOFA SEES CUTTING RISK-WEIGHTED ASSETS BY ABOUT $16.1B BASEL
  • BOFA SEES SALE GENERATING ABOUT $3.5B ADDED TIER 1 CAPITAL
  • BOFA SEES GAIN $3.3B ON SALE

In summary: That's $13.3 billion in new capital in the past week that BofA promises it does not need. At all. As for the buyers: the same sovereign wealth funds that just bailed out the Greek banking sector for a few more days.

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JohnFrodo's picture

They are just sticking to their core business. Having exhausted TBTF, they are going with so little can be easily resuced.

IBelieveInMagic's picture

The Qatar Royalty must have received a friendly call -- "You have a nice oil field over there ... like Libya -- BTW, do you want to buy this very nice bank". Done!

Libertarian777's picture

why do you think Qatar helped enforce the Libyan no-fly zone...

snowball777's picture

"BANK OF AMERICA KEEPS 5% STAKE IN CCB"

Bank of Lynching America could only find buyers for 95% of CCB stake.

fx's picture

what a silly statement! LOL they keep 5% as they continue to cooperate with the Chinese in banking. so what?

Burr's 2nd Shot's picture

Uh, they had a 10% stake and are selling half.

ben_bernanke's picture

Buffett is tight with the White House. Obama is scheduled to announce a new program in September. Buffett bought BAC stock. Do the math! National refi program for all underwater homeowners? Who knows...big news coming though. The campaign gears are churning.

DeadFred's picture

He's done sooo well with all the old 'new programs'. Still they usually do show up on the radar screens for awhile until they crash and burn.

Everybodys All American's picture

I think you are right. No way will congress approve of this spending scheme.

Libertarian777's picture

not that one specifically.

What will happen is Obama will propose a $1 trillion 12 month deficit funded 'jobs bill', funded by $10bn of tax increases per year for 10 years.

The GOP will come back with a $999 billion 1 year spending bill funded with $11bn of spending 'cuts' per year for the next 10 years.

 

Both will go to the lamestreet media and say how glorious their plans are and how unreasonable the other side is.

Meanwhile the Titanic continues to sink.

Greater Fool's picture

I agree, I think the WH and Fed will cooperate in some sort of housing market intervention along these lines. Treasury, by virtue of its control of Fannie and Freddie, does not need Congressional permission to initiate a stimulus of this sort.

Doing this would put Republicans in the tough position of being against something that is putting money directly in their constituents' pockets.

High Plains Drifter's picture

the oracle of omaha and bill gross both only move when they know someone is covering their asses........namely you know who, the amerikan taxpayer, the backstop of the world (for at least a while)

nope-1004's picture

That's "free markets" for ya.

USSA is no longer "risk and reward" capitalism.  It's now "insider knowlegde and white-collar theft" cronyism.

 

Diablo's picture

TD; Gold just took a dump. any news?

 

swissaustrian's picture

september futures settlements ahead...

JW n FL's picture

B of A stock costs LESS Than $5 bucks to dig out of the ground..

AND!!

you can eat it!

Prescient_Point's picture

Margin increases ahead as predicted by ZH and Interactive Brokers. Sit on the sidelines for a while for a good entry point.

Mugatu's picture

Just another American Beggar!

Version 7's picture

Anyone to guess what might be the half life time of this money?

fx's picture

ZH is obviously still on war with BofA. And publishing articles , err peices of crap that don't hold any water. This sale has long ago been announced by BofA, so what's all the fuss about? ZH seems to be now in the spinning business as well - spin ANY news in such a way that it fits Tyler's & Co#s pre-determined opinions, biases and "forecasts". Quality of ZH is tracking the stock prices pretty close. unfortunately.

Hot Apple Pie's picture

Is this the stake they valued at $20 billion a month ago, then last week feared could be only sold for $10 billion, that they are selling for $8.5 billion?

We've known they were intending to sell the stake, but the question is why they need to sell so quickly and don't seem to be able to wait for a "fair" price.

FMR Bankster's picture

The whole stake was valued at $20 billion and they sold half for $8.5. They should have sold it all but I guess they don't want to appear to panic. Bankings all about appearances, especially when you don't have enough capital to cover all the sh*t you have on the books.

fx's picture

no, it's half of this erstwhile 20 bn stake. It slid by about 15 % in value since then but that's what the world equity markets did in general. my point here is that people are so one-sided against BofA and keep talking about their ultimate demise (or TARP xx or bailout or whatever) that they absolutely miss the upside potential in this stock for the longer term. In a blog such as ZH's that is focussed exclusively on bad news and gloom and doom people get carried away with all tjhis negativity much the same way as the perma-bulls get carried away with ever loftier stock price projections, euphoria etc. I just wished, ZH would get a bit more balanced and would regain the high quality they once had. they lost a lot of that over the past couple of months and if they continue to do, I will certainly spend my time elsewhere.

optionsoptions's picture

I have to agree on this point about BAC. Zerohedge always complains about misleading headlines from the MSM to generate pageviews and this is the same thing.

 

BAC said they were going to sell this stake. They also said selling this stake would not only raise capital, but decrease risky assets which should help lower the need for capital.

Hate BAC all you want but this is part of the plan of "not needing additional capital" - ie. sell this equity position, decrease risky assets, earn positive income which will be retained as capital and lower expenses.

Please stop these sensational headlines which you know to be wrong. Its detracts from your better posts and overall thesis of seeking the truth

JW n FL's picture

 

 

http://www.youtube.com/watch?v=WKP5hg-B1N8

the bullets never lie..

you dont have to like Tyler's form.. but the Charts NEVER LIE!!

so love it or lump it..

correct is correct... ,making money is making money.. as oppsed to losing money.

RobotTrader's picture

15 days worth of BAC shorts now in a losing position

Everybodys All American's picture

Down from $15 and change to as low as $6 this year alone. You are losing your perspective.

Greater Fool's picture

Probably worth a flier at 6 given the capital raises. Not sure we will see those levels again, though, and this name does not entice me at 8.

RobotTrader's picture

Allstate and Hartford are flying off the lows.
I warned you guys about Irene being "less bad"...LOL.....

crash_davis's picture

BofA don't need to raise capital. Just like bear stearns didn't need to raise capital. just like lehman didn't need to raise capital. just like merrill lynch didn't need to raise capital. just like AIG didn't need to raise capital...  oh shit.

Cognitive Dissonance's picture

Just as long as nearly everyone agrees to believe the fiction, it is not fiction. It is only when 'faith' or 'belief' in the make believe reality is lost (usually very suddenly) that reality morphs back into fiction.

Darth Silver's picture

clearly just coincidence. nothing more to see here.

shushup's picture

I thought the problem was that no one wants to buy it from them.

PulauHantu29's picture

just sold th efamily jewels to get money "we don't need" also. Next comes the dog. Man's best friend yes, but he may bring in a few dollars of money "we don't need" to pay the rent and buy food.

 

Joe Davola's picture

Don't sell Fido, take him for a wok.

TradingJoe's picture

Hombres, sell your "long shit" into this "strenght" and go "short shit", you'll love it in a few days!

Dr. Engali's picture

Does anybody know if that 3.3 bil gain is true number?

Flakmeister's picture

Quote of the day:

 Bank of America is panhandling for spare change like a dying wino as it whirls around the drain.

MrBoompi's picture

The "same sovereign wealth funds" aspect of the story is interesting to me.  Who are these people?  Can we even find out?

traditionalfunds's picture

Based on 1 US dollar = 7.7950 HK$ and CCB H share closing price of 5.55 HK$ 

 

Considering BAC stated proceeds of $8.3B on the sale of 13.1B shares it appears that BofA is giving buyers of CCB shares an 11% discount. Good deal for the buyer. Not so good for shareholders.

how to trade armageddon's picture

Umm, if BAC has been marking to market its CCB stake, it already counted the profit on its CCB stake a long time ago. Selling it generates liquidity but no current gain, unless the stake was valued at cost, which I doubt.

 

Greater Fool's picture

It does also decrease the bank's risk profile. But in essence you're right--this does basically nothing to address solvency concerns.

lizzy36's picture

Rumor has it that Singapore state fund Temasek was among the investors that agreed to buy shares of CCB. (reuters).

Anyone remember Temasek, doubling down on Merrill in 2008.

I LOVE the SWF's.

Nothing says salvation like having a SWF, throw worse money after bad.

On the topic of Merrill, I just wanted to repeat the immortal words of John Thain Circa 2008.

We're very confident that we have the capital base now that we need to go forward in 2008," Thain said in January.

"We have more capital than we need, so we can say to the market that we don't need more injections. We can confirm that we have tackled the problem," Thain told Spain's El Pais newspaper in March

On July 29, 2008 they issued $8.5B in equity. Of course 6 weeks late they were subsumed into the black hole aka BAC.

 

Joebloinvestor's picture

Common shareholders should demand that Brian Moynihan resign.

One big ass lying fuck.

They got hosed.

jmc8888's picture

13 billion down, a couple trillion to go.

Don't think they'll get there....without some fed help.  Of course what about their derivatives?

Ted K's picture

Are you trying to tell us the Asian eyes and FFF investment grade analysts of CNBC "Fast Lose Your Money" are full of pure unadulterated shit and are just there to protect the banks like Bartiromo and her televised rim job of Thain??? Tyler are you now telling us that "Oh!! Oh!! Yummy Nummy!!! Yummy Nummy!!!! That brown stuff in your undies sure tastes good Mr.Thain, can I wear this tighty whitey on my head????" doesn't count as financial analysis post 2008???

 Really you got some nerve Tyler, just be quiet!!!  The people on CNBC ordered you to cease and desist!!!!