Bank of America plans to shed part of its 9 percent stake in China Construction Bank in order to raise capital while at the same time looking to exercise options to buy more shares at below-market levels, the Financial Times reported on Monday.
The No. 2 U.S. bank's chief executive, Ken Lewis, said late last year that the lender hoped to sell some of its Construction Bank shares in 2008 and was "talking to the Chinese to see what level they would be comfortable with".
Bank of America, which is set to report results later on Monday, paid $3 billion for its Construction Bank stake in 2005 and has the right to increase its holdings to 19 percent, the Financial Times said.
The newspaper, citing people familiar with the matter, said Bank of America aims to shed the stake to offset credit crunch-related writedowns while at the same time maintaining good relations with China's second-largest bank.
The newspaper said Bank of America had not yet decided how many shares it was likely to buy or sell.
Shares in China Construction Bank have lost 31 percent since their peak hit in October but are still trading 162 percent above their initial public offering price. The stock rose 2 percent on Monday in Shanghai and was up 2.6 percent on the Hong Kong Stock Exchange.