--Bank is in final stages of talks to buy City National in
Florida
--Cost of acquisition could total nearly $900 million, source
says
By Rogerio Jelmayer
SAO PAULO--Latin America's largest bank in terms of assets,
Banco do Brasil SA (BBAS3.BR), is in the final stages of
negotiations to acquire a small bank up for sale in Florida, as it
seeks to offer more services to the many Brazilians living in that
southeastern U.S. state.
"Banco do Brasil is taking the final steps to acquire City
National, and the conclusion of the transaction is expected later
this month," a banker involved in the negotiations said in an
interview. "The value of the acquisition could be close to $900
million." The banker did not wish to be named.
Banco do Brasil has been among bidders for City National since
the start of this year. Previous reports said the Brazilian
state-run bank was willing to spend $750 million on the deal.
However, due to competition with other banks, the Brazilian bank
has increased its offer, the banker said.
The executive declined to name other banks in the dispute.
"A top Banco do Brasil executive is in the U.S now to arrange
final details of the deal," said the banker.
Spain's Bankia SA (BKIA.MC) put City National Bank of Florida up
for sale last year, as part of a plan to shed assets to boost
capital ratios and restructure its business at home in the wake of
the collapse of a decade-long real-estate bubble in Spain. In
February, Bankia Chairman Jose Ignacio Goirigolzarri said more than
a dozen potential bidders were looking at the Miami-based bank, and
his company aimed to close on a sale in the second or third quarter
of this year.
City National Bank has a total of 26 branches in the U.S.
"We are always looking at overseas possibilities [for
acquisitions]," said Banco do Brasil Vice President for Finance
Ivan Monteiro when questioned on possible acquisitions. "The Latin
America market and the U.S. market are priorities within our
strategy and we are always examining possibilities in these two
markets."
Mr. Monteiro added, "In the U.S., we want to meet the needs of
Brazilians living there and Brazilian companies with operations
there." Mr. Monteiro declined to comment directly on talks
regarding City National.
For Banco do Brasil, a successful bid for City National would
represent an aggressive step in the Brazilian bank's international
expansion, following a $6 million purchase last year of tiny
Florida bank Eurobank, which has just three branches. Banco do
Brasil is keen to grow overseas, albeit at a conservative pace, as
part of a diversification strategy that's largely focused on
serving Brazilians and Brazilian companies overseas.
The move has been broadly welcomed by analysts, who believe the
bank's relatively cautious approach reduces risks related to
opening up new markets. Banco do Brasil has also been analyzing
opportunities in other Latin American countries, particularly
Chile, Colombia and Peru.
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. The Brazilian bank has said it wants
international operations to increase to 15% of total revenues in
the next few years, up from around 8.4% at the moment. The figure
is up from 1% just four years ago.
Write to Rogerio Jelmayer at rogerio.jelmayer@dowjones.com