Bank of America Corp, said on Tuesday that it would exercise part of its option to buy shares of China Construction Bank, investing HK$14.52 billion (US $1.86 billion) and raising its stake in China's second-largest bank to 10.75 percent.
The new shares are currently worth about HK$39.9 billion (US $5.11 billion), offering some good news for a US retail banking giant that has been hit by rising consumer credit losses and a weakening economy.
Bank of America said it intended to buy 6 billion of CCB's Hong Kong-listed shares around June 5 for about HK$2.42 each, under a formula set when it first agreed to buy a 9 percent stake in CCB investment in June 2005 for US $3 billion. The investment in one of the world's hottest economies has paid off handsomely for the North Carolina bank. CCB stock has surged 83 percent since the 2006 IPO, closing at HK$6.65 per share in Tuesday trading.