BofA Sells Half Its Stake in Chinese Bank for $8.3 Billion

Bank of America said Monday it was selling about 13 billion common shares, or 5%, of China Construction Bank in to a group of investors for some $8.3 billion in cash and an after-tax gain of $3.3 billion.

The transaction is expected to close in the third quarter of 2011 and is subject to customary closing conditions. After the sale, Bank of America will continue to hold a 5% stake in CCB.

“Our partnership with China Construction Bank has been mutually beneficial,” said BofA CEO Brian Moynihan in a press release.

According to BofA, the two banks are discussing a potential expansion and extension of their existing strategic-assistance agreement.

“This sale of approximately half of our shares of CCB stock is expected to generate about $3.5 billion in additional Tier 1 common capital and reduce our risk-weighted assets by $7.3 billion under Basel I,” said BofA CFO Bruce Thompson in a statement. “This month alone, through non-core asset sales and other actions, we expect to generate approximately $5.8 billion in additional Tier 1 common capital and reduce risk-weighted assets by approximately $16.1 billion under Basel I.”

The transaction was solely managed by Bank of America-Merrill Lynch, and BofA’s stock (BAC) traded up about 5% early Monday to $8.15 a share.