By Rogerio Jelmayer
SAO PAULO--Latin America's largest bank in terms of assets,
Banco do Brasil SA BBAS3.BR, BDORY), is in advanced talks to buy
City National Bank of Florida, a unit of Spain's Bankia SA
(BKIA.MC), and to increase its stake in local bank Banco Votorantim
SA, according to a banker involved in the talks.
"Banco do Brasil is in advanced talks to acquire City National,
and it may cost at least $750 million," the banker said.
At the end of February, Bankia Chairman Jose Ignacio
Goirigolzarri said the bank had more than a dozen potential bidders
looking at its Miami-based bank and aimed to close a sale in the
second or third quarter this year. City National was put up for
sale last year, when Bankia was nationalized after being caught up
in the European sovereign-debt crisis.
If Banco do Brasil succeeds in the bidding for City National, it
would be a new and more-aggressive step in the Brazilian bank's
international expansion, following a $6 million purchase of another
Florida bank, Eurobank, last year. Banco do Brasil is growing
overseas as part of a diversification strategy largely focused on
serving Brazilians and Brazilian banks based overseas.
City National has 26 branches in the U.S., and the deal could be
wrapped up by the end of May, the banker said.
This isn't the only target--the bank is looking for other assets
in the U.S., mainly in Florida and New Jersey, a banker involved in
the negotiations said.
Banco do Brasil's press office declined to comment for this
article.
The first major step taken by Banco do Brasil outside Brazil was
in late 2010, when it bought control of Argentina's fourth-largest
bank, Banco Patagonia SA (BPAT.BA, BPTGF, BPTGY). The bank has said
it wants international operations to account for 10% of the
business, up from about 5%.
Meanwhile, Banco do Brasil is also in advanced talks to increase
its stake in Banco Votorantim SA, a midsized local bank, to 75%,
according to the same banker. Banco do Brasil initially acquired
49.99% of Banco Votorantim for 4.2 billion Brazilian reais ($2.1
billion) in 2009.
A financial proposal hasn't yet been made, and the two sides are
discussing the size of the board of directors and the number of
votes, the person said. A deal is likely to be ready in the next
couple of months, the person said.
Banco do Brasil has publicly acknowledged the talks are under
way but hasn't provided any details. The press office also declined
comment.
The bank has no interest in buying all of Banco Votorantim's
shares, as that would require changes in legislation because
government-run banks are barred from buying private-sector peers.
The executive said there are also practical reasons for wanting to
maintain some independent shareholders.
"As a private-sector bank, Banco Votorantim has less bureaucracy
than Banco do Brasil, and the intention would be to keep it that
way," the banker said.
Banco Votorantim declined to comment for this article.
Banco do Brasil is believed to be interested in Banco Votorantim
to open up new business lines, including perhaps investment
banking, as it seeks to diversify revenue amid a historic decline
in Brazilian interest rates. Banco Votorantim acts as a retail bank
and also has a strong investment-banking unit, which also operates
as a brokerage.
Banco do Brasil is the country's largest lender to business and
consumers, with a loan portfolio equal to nearly $300 billion, or
more than 20% of the total financial system. But Brazil's
investment-banking arena, which includes debt and equity issues,
private banking and mergers and acquisitions, has long been
dominated by private-sector heavyweights such as Itau Unibanco
Holding SA (ITUB3.BR, ITUB4.BR, ITUB) and Banco Bradesco SA (BBD,
BBDC4.BR, BBDO), and investment bank Banco BTG Pactual SA
(BBTG11.BR).
Write to Rogerio Jelmayer at rogerio.jelmayer@dowjones.com