By Rogerio Jelmayer and Luciana Magalhaes
SÃO PAULO--Banco Bradesco SA's acquisition of the Brazilian unit
of HSBC Holdings PLC is its biggest deal ever, but it isn't enough
to push it past private-sector bank rival Itau Unibanco Holdings SA
in terms of assets.
Bradesco will pay a total of $5.2 billion for HSBC assets in
Brazil. Combined, Bradesco and HSBC have total assets worth 1.05
trillion Brazilian reais ($314 billion), compared with almost 1.12
trillion reais for Itau Unibanco, according to central bank figures
for the first quarter, the latest data available.
Banco Bradesco ended the first quarter with total assets worth
883.4 billion reais, while HSBC ended the quarter with 167.9
billion reais in assets.
Brazil's banking industry is highly concentrated and dominated
mainly by five players: state run peers Banco do Brasil SA and
Caixa Economica Federal; and private sector banks Itau, Bradesco
and the local unit of Spain giant Banco Santander.
Brazil's five largest banks account for 80% of total assets of
the banking industry, according to the central bank.
However, as the major private sector banks in Brazil, Bradesco
and Itau are particularly competitive.
Monday's acquisition marked a return of Banco Bradesco into the
merger and acquisition arena after years of organic expansion, with
an aggressive campaign to open branches across the nation.
The last acquisition by Bradesco took place in 2009, when the
bank acquired IBI Mexico, for an undisclosed amount. It also marked
the bank's biggest acquisition, surpassing the previous largest
deal in 2003, when it bought BBV for 2.63 billion reais.
With Monday's acquisition, Bradesco will take over all
operations of HSBC in Brazil, including retail, insurance and asset
management, as well as all its branches and clients. HSBC has a
total of 5 million clients across Brazil.
"The acquisition allows Bradesco to gain in scale and
optimization of platforms, with an increase in national coverage,
consolidating the leadership in the number of branches in several
states, besides strengthening its presence in the high-income
segment," the bank said.
Historically, Bradesco has been better positioned with low- and
middle-income clients, while Itau has been more focused on
high-income clients. Itau has expanded aggressively in recent
years, via mergers and acquisitions across South America.
After years of dominance by Bradesco, at the end of 2008 Itau
surpassed its local rival, after merging its operations with local
player Unibanco.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and
Luciana Magalhaes at Luciana.Magalhaes@dowjones.com
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