Billionaire Warren Buffett\'s Berkshire Hathaway will buy $5 billion in preferred shares of beleaguered US banking giant Bank of America, the bank said on Thursday.

Billionaire Warren Buffett\'s Berkshire Hathaway will buy $5 billion in preferred shares of beleaguered US banking giant Bank of America, the bank has said

"Bank of America Corporation announced today that it reached an agreement to sell 50,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share to Berkshire Hathaway, Inc. in a private offering," BofA said in a statement.

Buffett\'s investment was a huge vote of confidence in BofA, which has been plagued this year by huge legal costs stemming from the 2008 financial crisis, as well as doubts about the strength of its capital base.

The news sent Bank of America stock rocketing nearly 23 percent in opening trade Friday.

Earlier this week, the bank\'s share price had fallen to less than half its value at the beginning of the year, leading some analysts to describe it as undervalued.

"Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it," Buffett said in BofA\'s statement, referring to the bank\'s chief executive Brian Moynihan.

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

The move was reminiscent of Buffett\'s $5 billion investment in Goldman Sachs at the peak of the 2008 crisis, which was crucial in helping the investment bank emerge from the financial meltdown in good health.

Buffett is renowned for his strategy of buying stock in undervalued companies and reaping profits as their share prices rise.

Bank of America is the United States\'s largest bank in terms of deposits.