BofA May Recognize China Construction Gain
August 10, 2010 4:51 AM
Bank of America (NYSE: BAC), the largest U.S. bank by assets, may see a $13 billion capital boost on its third-quarter financials when the bank recognizes its 11% stake in China Construction at current market valuee.
Bank of America acquired shares in China's second-largest bank in 2005 and at one point held 17% of China Construction's shares. The North Carolina-based bank pared its holdings last year.
To this point, Bank of America's stake in the Chinese bank has been valued at $9.2 billion, the original purchase. With Bank of America's lockup expiring in less than a year, accounting rules require the stake to be carried at market value -- now $22.9 billion, according to Bloomberg News.
Bank of America posted a $7.3 billion pretax gain on 2009’s income statement by selling some China Construction shares, Bloomberg reported.
China Construction is also the second-largest bank in the world behind rival Commercial Bank of China.
