BofA to increase stake in China Construction

Bank of America Corp. will increase its stake in China Construction Bank to nearly 11 percent.

Charlotte-based BofA (NYSE:BAC) says it will exercise part of the option it has to purchase China Construction's common shares. BofA will buy 6 billion shares for nearly $1.9 billion around June 5.

BofA won't be able to sell those shares until Aug. 29, 2011, without the consent of China Construction.

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With the pending purchase, BofA will hold about 25.1 billion shares, representing 10.75 percent of China Construction's issued shares. BofA currently holds about 8.2 percent of the issued shares.

In June 2005, BofA bought a 9 percent stake in China Construction in a $3 billion deal. It was the largest purchase of stock in a Chinese bank by an overseas lender. China Construction later launched an initial public offering. The sale of those additional shares reduced the percentage of BofA's stake in the bank.

BofA has an option to increase its investment in China Construction to 19.9 percent.

The two banks have launched more than 20 partnership projects, including a leasing business in Beijing, no-fee cash withdrawals from BofA's ATM machines in China and improved call centers and retail branches.