Latin Finance - December 2008 - 37

brazil banking consolidation Faced with big foreign competitor: Salles rumored by local press in the 6.5 billion Unibanco, and the same size as Itaú,” writes Salles, referring to Santander, in reais ballpark stand to make it an even BdB Scoops up Leftovers a memo sent to Unibanco employees on more formidable force. With Nossa Banco do Brasil’s pending acquisition of the day Itaú-Unibanco was announced. Caixa it gains access to a large pool of Nossa Caixa, heard in the 7 billion reais He and Setubal began in July 2007 a judicial deposits and state employee area, as well as its talks to acquire a series of secret meetings to discuss accounts, while with Votorantim it 49% stake in Banco Votorantim, joining their institutions, held would acquire the country’s and run by two of Brazil’s most leading automobile finance established banking dynasties. business. Top 20 Brazilian Banks Salles’ revelation on how The deals boost its asset A ranking in flux long the talks had been going base, already the single largest Total Assets Deposits on belies the notion that the in the country, by 128 billion (BRL bn) (BRL bn) Branches two institutions were hurriedly reais to an estimated 573 Banco do Brasil 403 195 4,117 billion reais, using central bank mashed together in the face of Bradesco 348 123 2,639 a global liquidity crisis. But figures. That is almost exactly Itaú 340 87 3,205 analysts say the worsening the size of Itaú-Unibanco’s Caixa Economica Federal 264 148 2,060 situation that began taking on estimated total asset base ABN AMRO 164 70 1,148 a systemic nature likely spurred following the merger, Unibanco 170 53 947 the deal to completion. What’s according to Goldman. Santander 127 47 1,090 more, bankers see more M&A The big question mark HSBC 97 54 925 ahead in Brazil’s still hangs over how Bradesco plans Votorantim 74 21 14 fragmented banking sector, to handle this sudden surge by Safra 62 9 124 especially among middle its three biggest competitors, Nossa Caixa 54 33 560 market firms. which, at least by asset size, Citi 39 7 127 “I believe there will be further demotes it to third from first BNP Paribas 25 3 4 consolidation in the banking place. While it is rumored to Banrisul 23 13 6 sector,” says Mark Rosen head of have bid for Votorantim, Credit Suisse 18 4 182 financial institutions investment executives away from the deal UBS Pactual 21 2 9 banking for LatAm and Caribbean say its desire to buy a BNB 15 3 6 controlling stake, as opposed to at Credit Suisse. “There are lots of Alfa 14 4 2 the minority piece Banco do conversations going on,” he adds. BBM 13 4 33 Brasil proposed, found little Rosen sees a handful of Deutsche Bank 12 4 5 support from Votorantim’s deals taking place in both 2009 controlling shareholders. and 2010 – activity that Source: Brazilian central bank *Balance sheet data as of June 2008 Bradesco CEO Marcio includes state-owned entities Cypriano concedes that buying smaller private sector banks, larger banks both private and state-owned acquiring credit portfolios of middle market firms, and even foreign players seeking to increase their share through acquisitions. A number of midsize banks have come under stress in the most recent downturn as their dollar lines used to lend to exporters dry up and those same clients begin to face rollover risk and derivatives losses. Several have seen their ratings outlook deteriorate, including Indusval, Daycoval, BicBanco, Panamericano, Pine, Tricury and are thus more vulnerable for takeover, say bankers eyeing the sector. Deals could be within the middle market space, or involve larger buyers from the top tier, they add. That many of the banks are now publicly traded also facilitates M&A, as it permits for share exchanges, notes Rosen. Secret meetings: Setubal December 2008 LATINFINANCE 37
Latin Finance - December 2008

Table of Contents for the Digital Edition of Latin Finance - December 2008
