Bank of America Death Watch: Unloading “Non-Core” Assets Aggressively

08-16-2011 • NakedCapitalism.com/

So what’s a struggling bank to do? If you are in a leaky boat, you throw anything disposable overboard and bail like crazy. But BofA is in the weird position of having potential a long term solvency problem without immediate liquidity pressures. So while selling dispensable operations is a good strategy right now, it needs to sell ones where it can show a profit over book vale or otherwise have a favorable impact on its capital levels. And the Charlotte seems a wee bit eager to dispose of assets. It is keen to ditch its 10% holding in China Construction Bank, but there are no nibbles, since between rights issues and equity floatation, Chinese banks are selling stock at a frenzied pace to strengthen their capital level to comply with soon-to-be-implemented Basel III requirements. If BofA does not unload this stake and CCB, as expected, also launches a rights offer, BofA will have to particpate, plowing more capital into an operation it wants to unload.