HONG KONG/NEW YORK, Sept 3 (Reuters) - Bank of America Corp started selling its remaining stake in China Construction Bank Corp (CCB) on Tuesday for up to $1.5 billion, according to a term sheet of the deal seen by Reuters, marking the final step of the U.S. bank's multi-year exit from the asset.

The Charlotte, North Carolina-based bank joins a list of Western banks that have found that their investments in Chinese financial firms did not provide the strategic benefits they had hoped for. Earlier this year, Goldman Sachs Group Inc sold out of its seven-year investment from Industrial and Commercial Bank of China.

The sales come as the Chinese banking system has shown signs of stress, with bad loans picking up as economic growth slows. As a result, several Chinese lenders are preparing to launch equity sales to bolster their capital base.

But even before the Chinese banking sector weakened, many U.S. and European banks decided to sell the assets to bolster their capital bases and focus on their main businesses.

Bank of America's investment in CCB dates to 2005 when it paid $3 billion for a 9.9 percent stake ahead of the Chinese bank's initial public offering.

At the time, Bank of America's then Chief Executive Kenneth Lewis said the partnership was designed to give Bank of America more access to roughly 1.3 billion Chinese consumers, while CCB would benefit from B of A's U.S. retail banking experience.
The U.S. bank increased its holdings in following years, before paring it down starting in 2009. In 2011, the bank raised a combined $14.9 billion from selling shares in CCB to a group of investors that included Singapore's Temasek Holdings .

Bank of America launched Tuesday's sale after a lock-up on its remaining stake expired last month.

The bank launched an offer for 2 billion Hong Kong-traded shares of CCB in a range of HK$5.63 to HK$5.81 ($0.73 to $0.75) each, according to a term sheet of the deal seen by Reuters. The price is equivalent to a discount of up to 5.1 percent to Tuesday's close of HK$5.93.

Bank of America shares rose 1.63 percent to $14.35 in morning trading.

CCB shares are down 4.7 percent since the beginning of the year in Hong Kong, outperforming the 9 percent decline in the financial sub-index of the Hong Kong stock exchange in 2013.

CLEANING UP

Bank of America has been cleaning up its balance sheet since the financial crisis. In the bank's 2012 annual report, chief executive Brian Moynihan wrote that the bank had divested more than $60 billion of assets outside its main businesses while improving capital ratios and maintaining its earnings power.

The Charlotte, North Carolina-based bank increased its second-quarter profit 70 percent to $3.57 billion. The bank managed to trim operating expenses by 6 percent while boosting its Basel III capital ratio.

The bank has been particularly active in streamlining its international operations. In recent years Bank of America sold its foreign wealth management businesses to Julius Baer Group and credit card portfolios in Canada, Spain and Britain to various banks and private-equity firms.

Some foreign banks continue to hold on to their investments in Chinese lenders. Among them is HSBC Holdings Plc, which owns a 19.9 percent holding in China's Bank of Communications Co Ltd and Spain's BBVA's has a 15 percent stake in China Citic Bank Corp Ltd