China Construction Bank (CCB), the country's third-largest lender, said on August 24 it would buy Bank of America's small Hong Kong and Macau operations for HK$9.71 billion (US $1.24 billion) as it expands beyond mainland China, and did not rule out further acquisitions.
Construction Bank, which is 8.5 percent owned by Bank of America, also said its first-half profit fell 18 percent, as it had received a tax benefit in the first half of 2005.
Excluding that tax benefit, its interim earnings rose 13 percent amid higher income from lending and fee-based businesses.
The world's tenth-largest bank by market value is now moving beyond China to diversify its business and Chairman Guo Shuqing said he would consider doing deals in the rest of the world, including Europe and the United States.
Construction Bank earned 23.2 billion yuan (US $2.91 billion) in the first six months of 2006, compared with earnings of 28.3 billion yuan in last year's first half.
The results fell short of a consensus estimate of 25.6 billion yuan, according to 5 analysts polled by Reuters.
Construction Bank is paying about 1.32 times the 2005 price to book value for the 17-branch Bank of America Asia network, which had total assets of HK$49.1 billion as of December 31.
Earlier this year, Malaysia's Public Bank Bhd paid HK$4.5 billion - equal to 2.5 times book value - for the Hong Kong banking arm of Asia Financial Holdings, which has 12 Hong Kong branches and three mainland China outlets.