Bank Of America Has No Additional CCB Plan In The Next 12 Months

The Bank of America once again exercised the call option and bought 19 billion 580 million H-shares from the Huijin Company and completed the pfer in November 28th.

Bank of America announced yesterday that it had no plans to increase its stake in the construction bank or to reduce its options in the next 12 months.

From the practical point of view, the two cases are unlikely to happen even if the Bank of America has the will.

Some market participants speculate that if the Bank of America reduces its stake in CCB, it may be pferred to Huijin and other large state-owned Chinese institutions through agreement.

The insiders of CCB expressed confidence in the possibility of Bank of America's reduction, saying that there are a lot of interested investors like CCB's good bank shares.

However, yesterday, CCB's Chen Caihong told reporters that at present, CCB did not receive notice from the Bank of America.

At the time of press release, Bank of America did not respond to the reduction of CCB shares.

After the change of interest, the Bank of China held a total of 44 billion 713 million shares of H-shares, accounting for 19.90% of the shares issued by China Construction Bank, accounting for 19.13% of the total shares issued by the Construction Bank.

From the point of view of the reduction of options shares, according to the agreement of the two sides on the sale of prohibited shares, the Bank of China can not pfer any H-share shares exercised by option without the written consent of the construction bank until August 29, 2011.

Under the following exceptions, it is possible for the US bank to resell the CCB stake.

These circumstances include pfer of shares to Huijin Company, CCB or CCB subsidiary, the pfer within the Bank of America group, and any pfer in accordance with any bid, merger, merger or similar pactions approved or recommended by the board of directors of the Construction Bank and pfer to shareholders of the Construction Bank in general, in the day-to-day business process of bank asset management, trust, brokerage, underwriting, trading or securities trading, and not for the purpose of avoiding the sale of prohibited arrangements.

Market participants yesterday told reporters that if the Bank of America intends to reduce its stake in the CCB, it would be more likely to pfer the CCB shares to large domestic institutions through agreement, such as the pfer to Huijin and other large state controlled Chinese funded enterprises.

Guo Tianyong, director of the banking research center of Central University of Finance and Economics, told reporters earlier that due to the pressure of subprime mortgage losses, foreign banks are likely to reduce their stake in Chinese banks to ease liquidity problems.

But in the long run, the profitability of China's banking sector will still be higher than that of the developed countries. Therefore, foreign banks will still regard Chinese banks as their preferred investment targets.

If the Bank of America reduces its stake in CCB, Guo Tianyong estimates that the possibility of direct reduction through the two tier market is unlikely.

Bank of America may choose partners to refer to the price of the two market as a reference, specify the agreement price, and then pfer shares through block trading.

Yang Jing: editor in charge