Singapore state investment firm Temasek Holdings has sold part of its stakes in two of China's biggest banks for a total of $3.62 billion.
Temasek offloaded some of its Hong Kong-listed shares in China Construction Bank (CCB) and Bank of China (BOC) -- two of China's "Big Four" -- through two holding units, Dow Jones Newswires said, quoting a source familiar with the deal.
A Temasek spokesman declined to comment when contacted by AFP.
Temasek unit Fullerton Financial Holdings Pte Ltd sold 5.188 billion shares in Bank of China through placements, raising $2.42 billion.
And Cairnhill Investments (Mauritius) Pte Ltd and Crescent Investments (Mauritius) Pte Ltd, two other Temasek units, sold 1.502 billion shares in China Construction Bank to raise $1.2 billion.
Temasek had a 6.76 percent stake, or 16.91 billion shares, in CCB as at December 31, 2010, according to the lender's 2010 annual report.
CCB declined to comment but Dow Jones calculations indicate Temasek's stake in China's second-biggest lender has been reduced to around 6.2 percent after the sale.
For BOC, Dow Jones quoted the bank's spokeswoman Zhao Rong as saying that Temasek will be left with a 2.2 percent stake in the lender after the transaction.
Temasek previously had a 4.06 percent stake in the lender, according to BOC figures.
"We have received notification from Temasek on transferring Bank of China's shares to other institutional investors," Zhao said.
By the end of trade in Hong Kong BOC shares fell 3.63 percent and CCB was down 3.24 percent.
The sales come amid concerns about Chinese banks' debt exposure after China's National Audit Office said local governments owed $1.65 trillion as of the end of 2010, of which a big proportion could go sour.
However, that announcement -- the first time China has given an overall figure for local government debt -- was followed by a warning Tuesday from ratings agency Moody's that the debt could have been understated by about $541.6 billion.
The agency also said a lack of a plan to tackle the bad loans meant it could downgrade its outlook for Chinese banks to negative.
Song Seng Wun, a Singapore-based regional economist with CIMB Research, said the move by Temasek does not mean it has lost faith in the Chinese banking sector.
"They are not exiting the Chinese banks, they still have stakes in these entities," he told AFP.
"They could have exited completely but the fact that they still have stakes suggest they are rejigging the portfolio."
Temasek had a global portfolio worth Sg$186 billion ($151 billion) as of the end of March 2010, focused largely in Singapore, Asia and emerging economies.
