BRAZIL: State-owned Banco do Brasil agrees to buy a 50 percent stake of Banco Votorantim to boost lending to car buyers

Record ID: 562549

  • Title: BRAZIL: State-owned Banco do Brasil agrees to buy a 50 percent stake of Banco Votorantim to boost lending to car buyers
  • Date: 10th January 2009
  • Summary: RIO DE JANEIRO, BRAZIL (JANUARY 09, 2009) (REUTERS) VARIOUS OF EXTERIOR OF BRAZILIAN STATE-OWNED BANCO DO BRASIL BANK WHICH BOUGHT A LARGE STAKE OF BANCO VOTORANTIM
  • Embargoed: 25th January 2009 12:00
  • Keywords:
  • Location: Brazil
  • Country: Brazil
  • Topics: Economic News
  • Reuters ID: LVA3Z7TD6XILWOCEP0N4T99CAJOV
  • Story Text: Federally-controlled Banco do Brasil agreed on Friday to pay 4.2 billion reais ($1.84 billion) for a major stake in Banco do Votorantim, gaining muscle to compete with private-sector firms amid a wave of consolidation in the Brazilian banking sector.
    The combined firm will have 553.3 billion reais in total assets and a credit portfolio of 232.8 billion reais, Banco do Brasil said in a presentation. Banco do Brasil will own 50 percent of Votorantim once the deal is completed.
    Banco do Brasil, Latin America's largest bank by assets, said the takeover will quadruple its portfolio of automobile loans, putting it closer to rivals such as Spain's Santander and Brazilian banks Itau and Bradesco.
    Analysts expect a wave of consolidation in Brazil's banking sector after Itau, the country's second-largest private sector bank, agreed to buy smaller rival Unibanco last year. The combination of the two banks would create a banking behemoth with assets surpassing Banco do Brasil.
    Finance Minister Guido Mantega said takeover helps to strengthen the banking sector and called on banks to cut interest rates.

    "I stimulate not only Banco do Brasil, but all Brazilian banks to work with lower interest rates, because if we continue with very high interest rates the country will not grow, the country will not sell (export). So this is a recommendation I give to the entire financial sector and Banco do Brasil has in fact been reducing its interest rates," he told reporters.
    Banco do Brasil agreed to buy Nossa Caixa, a commercial bank owned by the state of Sao Paulo, for 5.39 billion reais ($2.25 billion) in November.
    One week before the Nossa Caixa takeover, Banco do Brasil Chief Executive Antonio Francisco de Lima Neto said the bank was eager to expand through acquisitions and would be selective in choosing possible targets.
    Mantega also highlighted the importance of having strong financial institutions under state control during crises.

    "We have seen during this crisis the importance of having strong public banks in the country, because public banks can behave under influence.
    So we are giving another step in the direction of strengthening Banco do Brasil," he said.
    Lima Neto said on Thursday Banco do Brasil had "no negotiations under way" for possible takeovers, hinting the Votorantim purchase probably had already been closed.
    Banco do Brasil shares rose 4 percent to 16.01 reais in early trading on Friday.
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