Bank of America 'looking to make direct investments'

13 August 2010

Bank of America is planning to concentrate on making direct investments into companies rather than relying on private equity funds.

Jim Forbes, global principal investments executive at the financial institution, told Bloomberg that Bank of America has sold off around $3 billion worth of private equity investments this year.

He stated that there are no current plans to put any more money into such funds, with direct stakes potentially leading to board seats and therefore greater knowledge of and influence over a firm's operations.

"We're very focused on control-oriented opportunities where we can have a meaningful impact," Mr Forbes said.

The overhaul of the financial services sector that came in last month means lenders will only be able put a maximum of three per cent of their Tier 1 capital into hedge funds and private equity units.

At the moment, Bank of America's stakes in this area stand at around four per cent.

Earlier this week, analysts at Wells Fargo and Royal Bank of Canada forecast that Bank of America could add around $13 billion to its book value in its third quarter results thanks to its 11 per cent share in China Construction Bank.

By Gary Cooper

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