By staff reporter Wen Xiu

From Caijing Online

Bank of America (BOA) will exercise the remainder of its option to purchase ordinary shares of China Construction Bank (CCB) from China Safe Investments, also known as Huijin. After the transaction, BOA would hold about 44.7 billion H-shares of CCB, representing 19.1 percent of CCB’s total issued shares. Currently, BOA holds 10.75 percent of the Chinese bank.

The purchase is a continuation of BOA’s June 2005 investment in CCB and is expected to be completed by the end of November, according to the bank’s press release. The shares being acquired under the option may not be sold until August 29, 2011 without CCB’s consent.

The American bank said in its press release that it intends to remain a long-term and significant strategic investor in CCB.

A source from CCB added that BOA will not seek a greater voice on the board of directors or in business management. At present, BOA owns one seat on CCB’s board of directors. The source from CCB suggested that BOA forgoing involvement in CCB’s daily operations stands as acknowledgement of the Chinese bank’s satisfactory performance.

The same source form CCB said that the two sides are cooperating well. Although BOA is under pressure to maintain a good balance sheet, and CCB has seen its price go down in the past year, holding CCB’s stocks remains a stable and lucrative investment.

Market analysts said that BOA may decrease its holdings in CCB to the originally agreed-upon 10 percent after the stock market picks up again. But, according to a source with knowledge of the transaction, if BOA intends to dump CCB’s stocks, it will tap other major shareholders for the transaction, which will not affect the secondary market.