B of A’s Stake in China Construction Bank IN ONE CHART презентация

19% of China’s then-
second biggest bank by assets, China Construction Bank. It turned out to be an
incredibly lucrative investment. This chart and the accompanying narrative tell
its story.

of China Construction Bank in 2005,
paying $3 billion for 19.1 billion shares. This gave Bank of America a 9% stake
in the Chinese bank, with a five-year option to increase its interest to 19.9%.

the third anniversary of
CCB’s October 2005 initial public offering, they continued to be valued on Bank
of America’s balance sheet at their $3 billion cost basis.

Bank of America was within a year of being able to sell its
CCB stake. This meant Bank of America could switch to the fair value method
of accounting associated with available-for-sale securities. Bank of America
thus increased the position’s carrying value by $13.4 billion.

to purchase additional shares in
2008. It paid a net $3.3 billion to increase its stake in CCB to 44.7 billion shares,
representing roughly 19% of the Chinese bank’s outstanding common stock.

to unload its original purchase of 19.1 billion
shares (the 25.6 billion shares purchased under B of A’s option couldn’t be sold
until 2011). It did so, realizing a $7.3 billion pre-tax gain and thereby reducing its
remaining stake to 25.6 billion shares, or 11% of CCB.

in 2007, Bank of America was within a year of being able to
offload the lion’s share of the 25.6 billion CCB shares purchased under the option
agreement. As such, B of A adopted fair value accounting and recorded a $10.5
billion unrealized gain. It also received $535 million in CCB dividends in 2010.

was now free to offload all but two billion shares of its CCB
stake -- the latter were still subject to restrictions. It accordingly did so, selling
23.6 billion shares for a pre-tax gain of $6.5 billion. B of A also received $836
million in dividends from CCB in 2011.

and 2010, the pending expiration of restrictions on the two billion
shares still owned by Bank of America allowed it to increase the position’s
carrying value from its cost basis of $716 million to the fair market value of
$1.4 billion. By this time, Bank of America owned only 1% of CCB.

final year that Bank of America had an ownership interest
in China Construction Bank. During 2013, B of A realized a $753 million pre-tax
gain after disposing of its remaining two billion shares. All told, Bank of America
earned nearly $16 billion from its $6.3 billion investment.