BANK OF America has sold part of its stake in a Chinese bank as US financial institutions scramble to raise additional capital following the publication of last week’s government stress tests.

The bank confirmed yesterday that it raised $7.3 billion (€5.37 billion) from the sale of 13.5 billion shares in China Construction Bank to a consortium of four investors.

The sale, which reduces Bank of America’s stake in the Chinese bank to about 11 per cent from nearly 17 per cent, will help the US bank to shore up its balance sheet after last week’s stress test found it needs to find an additional $34.9 billion in capital.

Federal regulators identified Bank of America as one of the weakest of the country’s biggest 19 banks.

Last Friday, the bank started running a continuous stock sale, which will sell 1.25 billion shares over time and could raise more than $16 billion. It hopes to raise an additional $7 billion from earnings in the next two quarters.

Bank of America has received $45 billion as part of the US government’s bank bailout, but the bank hopes to fill its capital gap without using taxpayer funds. Like many big banks, it hopes to return the bailout funds to avoid allowing the government to take a major stake in the company.

Bank of America’s move comes amid reports that executives at Citigroup’s Primerica Financial Services have approached private investors with a view to selling its 100,000-person sales arm. Citigroup, which regulators say must raise $5.5 billion in additional equity to withstand a prolonged recession, plans to exchange more preferred securities into common stock.

Insurance giant AIG told Congress yesterday that it is selling many of its foreign assets to repay $180 billion in federal aid, and that it has reduced the risk its failure could pose to the global economy.

AIG this week announced plans to sell its Japanese headquarters to Nippon Life Insurance for $1.2 billion, but chief executive Edward Liddy told the House Oversight and Government Reform Committee that the company will not sell off its assets at fire-sale prices.

AIG plans to keep its US property-casualty and foreign general insurance businesses, and to retain a stake in its foreign life insurance operations. “How long the plan will ultimately take will very much depend on how quickly and how strongly the global economy recovers,” Mr Liddy said.