Foreign Investors Reduced Holdings of Chinese Banks

Bank of America Corp. sold $2.8 billion of China Construction Bank Corp. shares to boost capital and Hong Kong billionaire Li Ka-shing is raising as much as $524 million in Bank of China Ltd. stock sales.

Before that, UBS AG, Switzerland’s biggest bank, sold its entire stake in Bank of China on Dec. 31, the day a three-year “lockup period” ended.

Investors expect more sales to come as the transactions fueled concern other foreign investors will use their holdings to shore up balance sheets battered by the global credit-market contraction. Bank of America and some other foreign strategic investors are just having too many issues on their home turf, and they have to find a quick way to raise cash.

The Bank of America sale represents 13 percent of its stake in China Construction. Bank of America plans to be “a long-term and significant strategic investor in CCB, it’s believed that Bank of America sold the shares because of its financial situation. Bank of America, the largest U.S. bank, is trying to take advantage of almost $14 billion of paper profits from its CCB stake after paying about $33 billion to take over Merrill Lynch & Co.

So far, those transactions have no clues of bearish views on Chinese banks.