Bank of America May Add $13 Billion in Book Value on China Bank Stake
Bank of America owns 11% of China Construction Bank Corp., Bloomberg News reported. The stake has been valued at the original price of $9.2 billion, since Bank of America can't sell it until August of 2011. With the lockup expiring in less than 12 months, accounting rules mean that the stake has to be listed at market value. That's currently $22.9 billion.
The increase in book value will be included in third-quarter results, which will be reported in October.
The stake will "add significantly to tangible book value, and it's coming at a time when the Street is looking at tangible book value as an important yardstick," Nancy Bush, an independent analyst, told Bloomberg News.
Last month, Bank of America disclosed a potential $10 billion charge related to new regulations. The company's stock had the biggest one-day decline in 13 months on July 16.