Bank of America Doubles Stake in Chinese Bank

Shells out $7B while slashing jobs, taking bailout funds
By Kevin Spak,  Newser Staff
Posted Nov 18, 2008 8:02 AM CST
Guo Shuqing, Chairman of China Construction Bank speaks at the company's 2008 interim results announcement in Hong Kong, Monday, Aug. 25, 2008.   (AP Photo/Kin Cheung)
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(Newser) – Bank of America will inject $7 billion into China Construction Bank Corp, Bloomberg reports, nearly doubling its stake in the bank even as it slashes jobs and accepts government bailout money. CCB is down 45% over the past six months, and BoA CEO Ken Lewis is getting a 32% premium on that devalued market price. The acquisition comes on the heels of the purchase of Merrill Lynch, which will result in thousands of job cuts.

“This is falling closely on the heels of their receiving TARP money, which was intended to spur lending in the US or have bigger, stronger banks buy the failing banks,” notes one Morningstar analyst. “But neither of those things is happening.”