Bank of America has agreed to sell its HCA stakes back to the hospital firm in a move that should raise $1.5 billion in cash for the beleaguered US banking giant.
“The transaction is consistent with our strategy of selling non-core assets, building liquidity and strengthening the balance sheet,” said Jerry Dubrowski, a spokesman for Bank of America.
Shares of Hospital Corporation of America, which owns around 270 hospitals and surgery centres in the United States and Britain, rallied 10.8 per cent after the buyback was announced, while Bank of America was up 1.8 per cent.
HCA said in a statement that the deal would be completed by next Wednesday and that the shares being purchased represented about a 15.6 per cent stake in the hospital company.
The HCA stake was acquired for $1 billion in 2006 by Merrill Lynch, which two years later was taken over by Bank of America, the United States’s largest bank in terms of assets.
The HCA move comes several days after Bank of America said it would lay off 30,000 employees and slash $5 billion from its annual costs by 2014 as part of a sweeping restructuring plan.
The bank’s stock has tumbled in recent months amid doubts about the strength of its capital base and mounting legal costs from its disastrous involvement with subprime mortgages before the 2008 financial crisis.
Bank of America posted a $9.1 billion loss in the second quarter, mostly due to an enormous $8.5 billion settlement to resolve claims stemming from its issuance of mortgage-backed securities prior to 2008. In recent weeks, the bank has stepped up efforts to sell off assets that it acquired during the boom years. Last month, it sold half its stake in China Construction Bank for about $8.3 billion.
New York, Sept 15, 2011 (AFP)
