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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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Mon, 08/29/2011 - 09:50 | 1611440 JohnFrodo
JohnFrodo's picture

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

Mon, 08/29/2011 - 10:22 | 1611478 IBelieveInMagic
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!

Mon, 08/29/2011 - 14:15 | 1612321 Libertarian777
Libertarian777's picture

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

Mon, 08/29/2011 - 09:50 | 1611442 snowball777
snowball777's picture

"BANK OF AMERICA KEEPS 5% STAKE IN CCB"

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

Mon, 08/29/2011 - 09:51 | 1611446 fx
fx's picture

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

Mon, 08/29/2011 - 09:59 | 1611469 snowball777
snowball777's picture

For how long?

Mon, 08/29/2011 - 10:01 | 1611476 Burr's 2nd Shot
Burr's 2nd Shot's picture

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

Mon, 08/29/2011 - 09:51 | 1611444 ben_bernanke
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.

Mon, 08/29/2011 - 09:52 | 1611450 SheepDog-One
SheepDog-One's picture

Ooo a 'new program' WOW!

Mon, 08/29/2011 - 10:02 | 1611479 DeadFred
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.

Mon, 08/29/2011 - 09:56 | 1611459 Everybodys All ...
Everybodys All American's picture

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

Mon, 08/29/2011 - 14:27 | 1612386 Libertarian777
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.

Mon, 08/29/2011 - 10:00 | 1611472 Greater Fool
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.

Mon, 08/29/2011 - 10:10 | 1611505 High Plains Drifter
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)

Mon, 08/29/2011 - 10:20 | 1611535 nope-1004
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.

 

Mon, 08/29/2011 - 09:51 | 1611445 Diablo
Diablo's picture

TD; Gold just took a dump. any news?

 

Mon, 08/29/2011 - 09:57 | 1611463 LynRobison
LynRobison's picture

Yeah, silver too...

Mon, 08/29/2011 - 10:07 | 1611494 swissaustrian
swissaustrian's picture

september futures settlements ahead...

Mon, 08/29/2011 - 10:17 | 1611522 JW n FL
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!

Mon, 08/29/2011 - 10:12 | 1611508 Prescient_Point
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.

Mon, 08/29/2011 - 09:53 | 1611451 Mugatu
Mugatu's picture

Just another American Beggar!

Mon, 08/29/2011 - 09:54 | 1611455 Version 7
Version 7's picture

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

Mon, 08/29/2011 - 09:55 | 1611456 fx
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.

Mon, 08/29/2011 - 10:18 | 1611524 Hot Apple Pie
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.

Mon, 08/29/2011 - 10:53 | 1611662 FMR Bankster
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.

Mon, 08/29/2011 - 11:10 | 1611717 fx
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.

Mon, 08/29/2011 - 11:43 | 1611844 optionsoptions
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

Mon, 08/29/2011 - 10:23 | 1611543 JW n FL
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.

Mon, 08/29/2011 - 09:56 | 1611458 RobotTrader
RobotTrader's picture

15 days worth of BAC shorts now in a losing position

Mon, 08/29/2011 - 10:00 | 1611471 Everybodys All ...
Everybodys All American's picture

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

Mon, 08/29/2011 - 10:03 | 1611481 Greater Fool
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.

Mon, 08/29/2011 - 09:57 | 1611464 RobotTrader
RobotTrader's picture

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

Mon, 08/29/2011 - 09:58 | 1611466 crash_davis
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.

Mon, 08/29/2011 - 10:03 | 1611468 Cognitive Dissonance
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.

Mon, 08/29/2011 - 10:02 | 1611477 Darth Silver
Darth Silver's picture

clearly just coincidence. nothing more to see here.

Mon, 08/29/2011 - 10:03 | 1611482 shushup
shushup's picture

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

Mon, 08/29/2011 - 10:04 | 1611485 PulauHantu29
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.

 

Mon, 08/29/2011 - 10:22 | 1611542 Joe Davola
Joe Davola's picture

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

Mon, 08/29/2011 - 10:07 | 1611497 TradingJoe
TradingJoe's picture

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

Mon, 08/29/2011 - 10:16 | 1611519 Dr. Engali
Dr. Engali's picture

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

Mon, 08/29/2011 - 10:27 | 1611569 Flakmeister
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.

Mon, 08/29/2011 - 10:44 | 1611631 MrBoompi
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?

Mon, 08/29/2011 - 10:53 | 1611659 traditionalfunds
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.

Mon, 08/29/2011 - 10:54 | 1611663 how to trade ar...
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.

 

Mon, 08/29/2011 - 11:35 | 1611812 Greater Fool
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.

Mon, 08/29/2011 - 11:28 | 1611792 lizzy36
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.

 

Mon, 08/29/2011 - 12:09 | 1611923 Joebloinvestor
Joebloinvestor's picture

Common shareholders should demand that Brian Moynihan resign.

One big ass lying fuck.

They got hosed.

Mon, 08/29/2011 - 13:13 | 1612095 jmc8888
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?

Mon, 08/29/2011 - 13:24 | 1612125 Ted K
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!!!!

Mon, 09/05/2011 - 09:57 | 1634164 shacai
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