Bank of America said to raise $7.3B in sale to Asian investors

Bank of America Corp. shares reversed early gains today on reports the bank has raised $7.3 billion by selling part of its stake in China Construction Bank to Asian investors.

Shares rose as high as 2.6 percent in morning trading, though by the afternoon they were down 70 cents, or 5.4 percent, to $12.24, following the broader market’s decline.

The Charlotte, N.C.-based bank has sold 13.5 billion shares, or a roughly 6 percent stake, in the Chinese lender, several media outlets reported Tuesday, citing people familiar with the matter. This represents about a third of Bank of America’s 17 percent stake in the bank.

Bank of America spokesman Robert Stickler declined to comment on the reports, but said the bank will continue to be a major shareholder and strategic partner of China Construction Bank. A call to China Construction Bank in Hong Kong was not returned.

The Financial Times reported last week that Bank of America was considering selling nearly $8 billion of its stake as the bank faces pressure to sell off assets and raise capital.

Last week, the government’s stress tests of the 19 largest U.S. banks found that 10 banks would need to raise more capital to withstand a deepening recession. The government found that Bank of America needed to raise the most, nearly an additional $34 billion.

Bank officials have said they are considering sales of the bank’s Columbia asset management unit, as well as several other businesses, and may enter into several joint ventures. The bank previously said it planned to sell its First Republic Bank unit, which it inherited when it bought Merrill Lynch & Co. Those sales could help raise $10 billion.

Another $17 billion will likely be raised through the issuance of common stock, and the rest of the capital could come from cash flow from operations in the coming quarters, Bank of America said.

Following the collapse of the housing market, Bank of America was saddled with hefty losses on mortgages and mortgage-related assets. Losses were augmented by its hasty purchase of investment bank Merrill Lynch & Co. at the height of the credit crisis last fall.

During the first quarter, Bank of America recorded a $1.9 billion pretax gain from selling part of its China Construction Bank stake.