SAO PAULO--Brazilian bank Itau Unibanco Holding SA (ITUB,
ITUB3.BR) said Tuesday it has agreed to buy the local consumer
finance unit of Citigroup Inc. (C) for 2.77 billion Brazilian reais
($1.38 billion), the latest move in Citigroup's global strategy to
shed businesses where the U.S. bank doesn't have enough scale to
compete.
Itau, Brazil's largest private-sector bank, said it has agreed
to buy assets that use the Credicard brand, which had total loans
outstanding of BRL7.3 billion and 4.8 million cards issued.
The deal, which is subject to approval by regulatory
authorities, is a sign of further consolidation in the competitive
banking market in Latin America's largest economy.
The Brazilian banking industry is highly concentrated in the
hands of strong local players, including the two main
private-sector banks, Itau and Banco Bradesco SA (BBD, BBDO,
BBDC4.B4), and two government-owned banks, Banco do Brasil SA
(BDORY, BBAS3.BR) and Caixa Economica Federal. Those four banks
hold almost 70% of the financial system's assets, compared with
Citi's 1% share.
Citigroup said in a separate press release that it expects to
book a $300 million after-tax gain from the sale. Citibank's retail
branch network won't be affected by this transaction, the U.S. bank
added.
Citibank has 128 bank branches across the country, according to
central-bank figures. By comparison, Brazil's five biggest banks
have more than 2,500 branches altogether.
Lending in Brazil has more than doubled over the last decade,
amid strong economic growth, falling unemployment and rising
salaries. Although the pace of growth has slowed over the last two
years, bank executives expect lending to grow a solid 15% this year
in a market where Citigroup just had a marginal presence.
Under new chief executive officer Michael Corbat, Citigroup has
sharpened its focus on affluent customers in only the largest
metropolitan markets around the world. In December, the bank said
it would exit the consumer businesses in Uruguay, Turkey, Romania
and Pakistan. It has sold consumer operations in Germany,
Scandinavia, among other locations in recent years.
Write to Rogerio Jelmayer and Matthew Cowley at
rogerio.jelmayer@wsj.com and matthew.cowley@wsj.com
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