Brazilian banks go shopping around the world

Banks have suffered everywhere with the financial crisis. Well, not everywhere. Brazilian banks have cash and appetite for seizing opportunities in other countries. This is a shift of trends. Not so long ago Brazilian banks were being bought by international institutions.

Last week Banco do Brasil announced its move in Argentina. Yesterday, in an interview to the carioca newspaper Jornal O Globo, Aldemir Bendine,  president of the bank, declared: “We are going to enter heavily in the American market”.

This would not be the first time a Brazilian bank buys an American financial institution.

In May 2006, Banco Itaú announced the purchase of BankBoston – American arm of Bank of America – in Brazil for about $ 2.2 billion. Three months later, the bank acquired BankBoston branches in Uruguay and Chile for U.S. $ 1.37 billion.

The recent moves of Banco Itaú and Banco do Brasil show that Brazilian banks are ready to sit on the other side of the table; not as sellers but bidders.

Not so long ago, global players such as HSBC, ABN AMRO, BBVA and SANTANDER were arriving in Brazil. Analysts wondered if the international competition would threaten  Brazilian banks.

Turbulent times. Learning how to live without inflation

Brazil, once accustomed to high inflation for decades was under the impact of the Plano Real.  This was a tough call for banks. During the year of 1994 alone  the number of institutions was reduced from 243 to 156.  Proer (program for restructuring the financial system), line relief to banks established in 1995 to preserve both large and small financial institutions. Many state banks enrolled the privatization program.

Opportunity for global players to make a move in Brazil

The British bank HSBC purchased Brazilian Bamerindus, for $ 930 million in March 1997. HSBC boughtLloyds TSB’s Brazilian branch for $ 815 million in order to expand its stake in South America.

ABN Amro bought Banco Real for about $ 2 billion in July 1998. Later that year, ABN bought also the state bank of Pernanbuco, Bandepe. In October 2003, ABN Amro Real bank announced the purchase of Sudameris Brazil for R $ 2.190 billion.

The greatest symbol of the process privatization  state banks in the 1990s was the sale of Banespa, which belonged to the government of São Paulo and was at the time of the five largest banks in the country. In November 2000, Santander won the auction and acquired the bank for $ 7.05 billion.

In 1998, Spanish BBVA’s bought Excel, a bank in financial difficulties for $ 1. Five years later the Spanish abandoned the retail banking sector in the country and would sell its share in Brazil to Bradesco. The Brazilian market was not so easy after all.

Different crisis, different trend

The consolidation of the financial industry occurs during periods of financial crisis. The emergency of Brazilian banks among the leading financial institutions in the world has just began.  We should expect more .

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists Bureau. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil. She lives between Paris and Rio and is a member of the Harvard Club of Paris and of the Mercosur Women’s Forum.
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