Temasek Sells Its Bank of America (BAC) Holdings

In Q1, Singapore's Temasek sold its 3% stake in Bank of America (NYSE: BAC), taking a loss of around $3 billion in the process, as Tamakek refocuses on emerging markets.

Temasek along with many other of states' sovereign wealth funds invested in Merrill Lynch and other global banks during the early phase of the credit crisis, but got killed as the credit crisis deepened.

Temasek ended up with its stake in Bank of America when B of A bought Merrill in January.

Sources tell Reuters that Bank of America was likely not the first choice for Temasek because B of A did not offer the global banking franchise that prompted Temasek to buy into Merrill and other Western banks. Singapore's bigger sovereign wealth fund, GIC, also invested in Citigroup (NYSE: C) and UBS (NYSE: UBS).

Analysts are saying that Temasek probably sold its BofA holdings to limit its exposure to financial stocks, which at the end of March 2008 was 40% of its portfolio.

Temasek's portfolio fell 31% between March 2008 and November last year to $87 billion.

Temasek held 188.8 million Bank of America shares. At that time, its stake in Bank of America was worth around $2.6 billion, or $13.7 a share. In Q1, BofA shares were sold for between $2.53 and $14.81. Bank of America had an average price of $6.8 during the first quarter, according to Thomson Reuters data, giving Temasek a loss of about $1.3 billion since January.

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