CCB Wants To Buy Bank of America (Asia)
Bank of America Briefly The World's Biggest
China Construction Bank (CCB), China's third largest commercial bank, is interested in buying Bank of America (Asia), after failing to buy out Asia Commercial Bank in February. CCB is apparently reviewing the financials of Bank of America (Asia), an affiliate of the US-based bank, and an offer has yet to be made. A detailed plan is still under negotiation between CCB's newly-established investment banking department and Bank of America. Bank of America, the parent company, is a strategic investor in CCB, with a 9% stake. Early this year, CCB was linked to a possible buyout of 20% of New York brokerage and investment house Bear Stearns. Bank of America (Asia) has 17 branches in Hong Kong and Macau offering a wide range of consumer and commercial banking products and services. This news comes at a time when Bank of America briefly became the world's biggest bank, surpassing Citigroup yesterday in market cap. Though by the end of the day Citigroup had reclaimed its crown for the time being.
This reflects investors' preference for a growth story, which is giving kudos to Bank of America. Bank of America seems to be hitting on all cylinders domestically. In contrast, Citigroup has run into growth bumps that are taking longer to fix than many investors would like - Chuck Prince's strategy to invest in branches and people comes at a time when othe rbanks are more interested to put in great numbers. Prince's strategy was called into question by substantial shareholder Alaweed - I tend to side with Chuck, I think he is doing the right thing. When you are number one but not by a large margin - you need to distance yourself by getting the better people, as you already have the leverage in almost all other areas (cost of funds, branches, network reach, economies of scales, etc... ).
Being bypassed is not a definitive gauge of Citigroup's long-term prospects, but might be a blow for a bank that prides itself on its size and reach in more than 100 countries.