American business magnate Warren Buffet’s company Berkshire Hathaway has announced it is investing $5 billion ((£3.1bn) in Bank of America, BBC News reported.
The news of investment by billionaire investor and philanthropist has led to Bank of America’s shares moving up by 25%, before moving back to 10% ahead. Bank of America has also slashed 3,500 jobs in this month.
Buffet opined, he was impressed that bank was “acting aggressively to put their challenges behind them.” In July, Bank of America posted a record quarterly loss after agreeing an $8.5 billion settlement relating to sub-prime mortgages.
Warren’s company Berkshire Hathaway will get a dividend of 6% on the investment. Bank of America can buy back the stake at any time at a 5% premium on the sale price.
"Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it,” said Buffet in a statement. “I am impressed with the profit-generating abilities of this franchise.” he added.
Berkshire Hathaway Inc is an American conglomerate holding company headquartered in Omaha, Nebraska, United States. It oversees and manages subsidiary companies.
According to the Forbes Global 2000 List Berkshire Hathawayis the eighth largest public company in the world. Bank of America is an American multinational banking and financial services corporation and serves clients in more than 150 countries serves clients in more than 150 countries.
