SINGAPORE (Dow Jones)–Singapore’s Temasek Holdings Pte Ltd. sold its entire 3.8% stake in Bank of America Corp. (BAC) between January and March this year, swelling its losses from soured investments by about $4.6 billion.

Temasek, a state-owned investment company, disclosed the stake sale in a quarterly report filed with the U.S. Securities and Exchange Commission.

A Temasek spokeswoman confirmed the Bank of America divestment, but didn’t give any other details.

According to people familiar with the situation, Temasek sold the Bank of America shares for an average $7 a share, netting $1.3 billion.

Temasek made some high-profile investments in the past two years, including in Merrill Lynch and in Barclays PLC, in which it increased its stake in June 2008 to a little over 2% paying about $399 million.

Many investments have turned sour with the financial crisis battering share prices and asset values.

Temasek’s investment portfolio fell 31%, or S$58 billion, to S$127 billion in the eight-month period ended Nov. 30, Singapore’s Senior Minister of State for Finance Lim Hwee Hua said earlier this year.

The investment firm bought a 14% stake in Merrill in stages starting from December 2007, paying $5.9 billion in total. At that time, it described the purchase as a long-term investment.

When Bank of America acquired Merrill in January, that stake was converted into 189 million Bank of America shares.

Temasek was not informed of the merger talks between Merrill and Bank of America and “never wanted to be a Bank of America investor,” a person familiar with the situation said. “Very early in the year, the plan was set in motion to divest the holding,” this person said.

A second person close to the situation said: “(There was) little potential in Bank of America shares. If one sees the results of the stress tests in the U.S. and analysts’ reports on Bank of America, the picture is not bright.”

The results of the stress tests, during which U.S. regulators scrutinized 19 financial firms, were released last week and Bank of America was asked to raise $33.9 billion in common equity.

Shares of Bank of America traded between $2.53 and $14.81 between Jan. 1 and March 31. They closed at $11.31 Thursday.

“Temasek sold between the high and low of Bank of America shares during the first quarter,” thesecond person said.

Despite the losses from the Merrill investment, Temasek continues to be an active investor in the market, the people said.

This year, the state investor has been active in Asia, participating in various rights offers by firms like DBS Group Holdings Ltd. and Chartered Semiconductor Manufacturing Ltd., in which it holds 28% and 62.33% respectively, and by Bank Danamon, a mid-sized Indonesian bank.

According to Thursday’s SEC filing, Temasek also sold its entire holding of American Depositary Receipts of ICICI Bank Ltd. (532174.BY), India’s largest non-state-owned bank by assets.

Temasek held 3.6 million ADRs in December, according to a previous SEC filing for the quarter ended Dec. 31.