Bank of America's headquarters in Charlotte, N.C. (Photo: AP)

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.

On Thursday, BofA said it was selling 50,000 shares of preferred stock with a liquidation value of $100,000 per share and a dividend that pays 6% per year to Berkshire Hathaway (BRK-A), which is led by Warren Buffett.

“Bank of America is a strong, well-led company, and I called [CEO] Brian [Moynihan] to tell him I wanted to invest in it,” said Berkshire Hathaway Chairman and CEO Warren Buffett in a statement.

The troubled bank’s value has dropped sharply this year due to concerns over its need to raise capital and liabilities tied to subprime mortgages. (Its shares traded above $15 in mid-January.)

As part of the deal, Berkshire Hathaway will also receive warrants to purchase 700 million shares of Bank of America common stock at an exercise price of about $7.14 per share. The total purchase price for the preferred stock and warrants to be received by Bank of America, which bought Merrill Lynch in early 2009, is $5 billion in cash.

Late last year, Morgan Stanley (MS) sold its 34% investment in China International Capital Corp. Limited (CICC). That added a pre-tax gain of $668 million, or $0.17 a share to its fourth-quarter 2010 results.

Morgan Stanley then formed a joint venture with China Fortune Securities Co.