Bank of America buys strategic stake in China Construction Bank

June 17, 2005

Investment enhances CCB competitiveness

CHARLOTTE -- Bank of America Corporation today announced a definitive agreement to buy approximately 9 percent of the stock of China Construction Bank (CCB) for $3 billion, with the option of increasing its stake in future years.

“This investment is aimed at creating a long-term benefit by partnering with the best positioned bank in China, which is one of the fastest growing economies in the world with 1.3 billion consumers,” said Kenneth D. Lewis, Bank of America chairman and chief executive officer. “CCB has undergone an impressive transformation in the last several years. They have built a leading franchise in China, and we see value in combining their local knowledge and distribution with our product expertise, technology and experience with size and scale. Under our agreement, we will offer CCB the benefit of our experience in such areas as governance, risk management, credit cards, consumer banking and treasury services.”

Guo Shuqing, Chairman of China Construction Bank, said, “We are very pleased to have Bank of America, one of the world’s largest, most successful and respected financial institutions, as our strategic partner. I firmly believe this is a win-win partnership. The most fundamental and challenging task in transforming CCB is to establish a culture that is customer centric and market driven. Our goal is to provide the best service to our customers. We have much to learn from our partner in serving customers and creating shareholder value. This is the core of our comprehensive cooperation.”

CCB, the second largest commercial bank in China, has RMB 3,910 billion ($472 billion) in assets and RMB 3,491 billion ($422 billion) in deposits. It has 136 million active retail deposit account relationships, a national network of 14,500 branches concentrated in the more economically developed areas and a relationship with 92 of the top 100 enterprises in China. It is China’s second largest mortgage lender and has leading positions in credit cards and infrastructure loans. The bank is currently majority owned by China SAFE Investments Limited, an entity of the government of China.

CCB has taken a number of steps to bring their financial reporting and governance in line with international standards.

CCB is expected to list its shares on the Hong Kong Stock Exchange later this year, becoming the first of the Big Four state-owned banks to gain significant public ownership. Under the agreement, Bank of America will make an initial purchase of CCB shares from China SAFE Investments for $2.5 billion and an additional purchase worth $500 million at the time of the listing. Bank of America also has the right to bring its aggregate ownership as high as 19.9 percent over the next five-and-one-half years.

“This investment is structured in a very similar way to our highly successful investment in Banco Santander Serfin in Mexico and should create similar benefits,” Lewis said. “We have said that we liked the Serfin investment and would be interested in entering into another such transaction. It makes sense, if you are looking to tap into economic growth, to consider an investment in China.”

Bank of America currently operates a bank in Hong Kong with 16 offices offering an array of consumer banking products. It also has corporate banking offices in Beijing, Shanghai and Guangzhou.

Bank of America was advised in this transaction by Banc of America Securities and HSBC.

Bank of America
Bank of America is one of the world’s largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving 33 million consumer relationships with more than 5,800 retail banking offices, more than 16,700 ATMs and award-winning online banking with more than 13 million active users. Bank of America is the No. 1 overall Small Business Administration (SBA) lender in the United States and the No. 1 SBA lender to minority-owned small businesses. The company serves clients in 150 countries and has relationships with 98 percent of the U.S. Fortune 500 companies and 85 percent of the Global Fortune 500. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

China Construction Bank
China Construction Bank is the second largest commercial bank in China (source: The Almanac of China’s Finance and Banking 2004 Edition) providing a comprehensive range of commercial banking products and services primarily to domestic corporate and retail customers in China. CCB has 136 million active retail deposit accounts and serves 92 of the top 100 enterprises in China. CCB operates an extensive national network of approximately 14,500 branches and approximately 12,500 ATMs and is one of the largest providers of residential mortgages in China. CCB had approximately 12% share of total loans and approximately 13% share of total deposits in China at the end of 2004. As of December 31, 2004, CCB had approximately RMB 3,910 billion in assets.


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