BofA is agreeing to sell 80.8 million shares of HCA Holdings Inc. back to the health-care company, raising $1.5 billion for the bank and spurring a 10% stock-price rise at the Nashville-based hospital operator.
The BofA-HCA agreement sets an $18.61-a-share price, .
Selling the shares, equal to 15.6% of HCA, is "consistent with our strategy of focusing on our core businesses, building liquidity and strengthening the balance sheet," Jerry Dubrowski, a Bank of America spokesman, tells Bloomberg News. "Our customers do not choose to do business with us because we have an investment in a health-care provider."
BofA CEO Brian T. Moynihan has sold at least $40 billion of assets and preferred shares to raise capital and make the company easier to run. The company's plans to eliminate the 30,000 jobs over the next few years were announced earlier this week, about the edge that could give competitors of the Charlotte-based banking behemoth.
Merrill Lynch & Co., the securities firm acquired by Bank of America in 2009, made the original investment in HCA for about $1 billion in 2006, Dubrowski tells Bloomberg. Counting the latest sale, dividends, and an initial public offering, BofA had $3 billion in proceeds from that investment.
Bank of America gained 13 cents, or 1.8 percent, to $7.18 at 9:40 a.m. in New York Stock Exchange composite trading. HCA surged $1.86 to $20.47.
The Citigroup plan will apply to its trading and investment-banking units worldwide as well as consumer banking and global transaction services, Shannon Bell, a spokeswoman for the New York-based bank, tells Bloomberg. The bank had 263,000 employees at the end of the second quarter.
CEO Vikram Pandit, seeing weaker consumer confidence and the prospect of high unemployment continuing, wants to control costs.
And in that environment, the bank has "ongoing efforts to tightly manage expenses [and is] currently only filling positions we believe are critical to the line of business or function," according to Bell.
Citigroup rose 57 cents, or 2.1 percent, to $27.96 in composite trading on the New York Stock Exchange at 10:03 a.m. The shares had fallen 42% through yesterday, underperforming the 24-company KBW Bank Index, which was down 27%, Bloomberg reported.
Bell declined to comment on whether the bank planned to cut jobs at any of its so-called core businesses, including trading and investment banking.
"It does look like a hiring freeze," said Richard Staite, a London-based analyst at Atlantic Equities LLP, tells Bloomberg when asked about Citi. The analyst, who has an "overweight" recommendation on Citigroup shares, added: "I don't think that's too surprising in what is a very difficult revenue environment for all banks. They clearly face a difficult balancing act."
Citi Chief Financial Officer John Gerspach told analysts in July that expenses for the year would be higher than previous forecasts. Expenses at the bank had risen 8%, to $25.3 billion, in the first half of 2011, compared with a year earlier, and revenue had fallen 15%, to $40.3 billion, including sales at the bank's Citi Holdings unit. The unit has about $300 billion of unwanted businesses and assets. Profit fell 11%, to $6.34 billion.
Sales at Citigroup's securities-and-banking unit, which includes trading and investment banking, fell 18%, to $11.5 billion. Regional consumer banking revenue stayed flat at $16.2 billion, and the bank's transaction-services unit increased revenue 6%, to $5.2 billion.
Citigroup previously had announced plans to add branches outside the U.S. and more than double staff in China to 12,000 as Pandit, 54, sought to boost the bank's presence in emerging markets. The company has also hired about 40 managing directors this year for its investment-banking unit.
"We've added talent in businesses and regions that are targeted for growth," Bell says.
But Pandit had eliminated more than 100,000 workers from the bank's payroll since becoming CEO in December 2007, through layoffs and sales of distressed assets and businesses in Citi Holdings, according to Bloomberg.