Bank of America Corp. led decliners in the Standard & Poor's 500 Index after China Construction Bank Corp. said the U.S. lender will keep at least half its stake, spurring new debate on the American firm's capital plans.
Bank of America slipped 42 cents, or 6 percent, to $6.55 at 12:07 p.m. in New York Stock Exchange composite trading and sold for as little as $6.51. The lender, the biggest in the U.S., agreed to retain at least half its 10 percent holding, China Construction President Zhang Jianguo told reporters in Hong Kong. Some analysts, including Charles Peabody of Portales Partners LLC, had estimated the Charlotte, North Carolina-based bank would divest all of its shares.
"People like me thought they were going to unload the whole thing to help build their capital," Peabody said in an interview. "It means the process of getting to their Basel 3 capital goals could be more elongated, or that they will be more dependent upon increasing their disposition of non-core assets." The latter could further pinch revenue, he said.
Bank of America Chief Executive Officer Brian T. Moynihan, 51, has been selling businesses and assets as the firm seeks to comply with new international capital standards set by the Basel Committee on Banking Supervision. Last week the company announced it was exiting credit-card markets outside the U.S., and Moynihan said the lender will continue to pursue such sales.
Moynihan's company has lost about half its market value this year as rising costs tied to the 2008 acquisition of subprime lender Countrywide Financial Corp. weighed on capital and sparked speculation that the firm would have to issue new stock. He has repeatedly said a stock sale isn't needed and that he can divest non-core assets to meet capital standards.