Temasek sale prompts talk of UK bank stake sell-off

May 16, 2009
Singapore Democrats

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London Evening Standard

Temasek, the Singaporean government’s investment arm, has sold its entire 3.8% stake in Bank of America (BoA) at a huge loss, prompting speculation that it might also cut its stake in Barclays as it switches its focus to emerging markets.

The Singaporeans would not say how much the BoA stake was sold for, simply acknowledging that it had been reduced to zero during the first three months of this year.

The fund will have lost almost $4 billion (£2.6 billion) on the stake which it picked up as a result of its failed attempt to bail-out Merrill Lynch which was eventually taken over by BoA.

Temasek first came to Merrill’s aid in December 2007 and again in July 2008, investing a total of $5 billion in new equity.

Those shares converted into BoA shares after the takeover.

Although Temasek refused to say how much it sold the shares for, based on BoA’s average price of $6.73 during the first quarter, the stake would have fetched $1.27 billion.

Since the end of March BoA shares have risen by more than 60%.

Temasek bought its 1.6% stake in Barclays as part of the British bank’s aborted attempt to take over Dutch bank ABN Amro.

The Singaporeans paid 720p a share for the stake at a cost of £972 million.

Today that stake is worth just £370 million.