SINGAPORE - Singapore state investor Temasek has defended the divestment of its Bank of America stake at an estimated loss of more than $3 billion, saying the risk environment and nature of the investment had changed.

Temasek, which got a 3 percent stake in BofA after the latter bought Merrill Lynch in September 2008, sold its stake in the U.S. lender in the first quarter of this year, according to a regulatory filing last week.

In a letter to the Straits Times newspaper on Friday, Temasek Managing Director for Corporate Affairs Myrna Thomas said the state investor had bought into Merrill's 'specific businesses' but ended up with BofA's 'linkage to the broader U.S. economy'.

'The risk-return environment had also changed substantially,' she said without elaborating.

'We may choose to divest an investment, even at a loss, to optimise our risk or portfolio exposure, or if there are better opportunities elsewhere or later,' she added.

Temasek, which invested in Merrill in December 2007, had previously described its investment as long term.