Warren Buffett invests $5bn in BofA

26 August 2011

US business man Warren Buffett and his firm Berkshire Hathaway are to invest $5 billion in Bank of America (BofA) to bolster the financial health of the ailing institution.

The move is a vote of confidence in the lender, which has seen the value of its shares drop by 39 per cent during the latest three-month period, the Guardian reported.

According to BofA, Mr Buffett will buy 50,000 of the bank’s shares with a liquidation value of £100,000 per share and a dividend of six per cent per annum.

The well-known investor said: “BofA is a strong, well-led company, and I called Brian [Moynihan, the firm’s chief executive] to tell him I wanted to invest in it."

“I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. BofA is focused on their customers and on serving them well. That's what customers want, and that's the company's strategy.”

Under the terms of the deal, the bank will be able to buy the shares back at a five per cent premium.

Mr Buffet previously invested $5 billion in Goldman Sachs during the height of the global financial crisis.

By Jim Ottewill

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