Banco do Brasil may pursue acquisitions in U.S.

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  • Posted on April 25, 2011

    By Aluisio Alves and Guillermo Parra-Bernal

    SAO PAULO (Reuters) – Banco do Brasil (BBAS3.SA), Latin America’s largest bank by assets, is considering possible acquisition targets in the United States, where it wants to boost clients among a growing community of Brazilian residents, a senior executive said on Monday.

    The bank, which earlier in the day announced the $6 million purchase of Florida-based lender EuroBank, expects to have as many as 20 branches in the country within five years, said Allan Simoes Toledo, who heads Banco do Brasil’s international business and wholesale banking divisions.

    Although the focus remains in growing organically in the world’s largest economy, “acquisitions can’t be ruled out at all,” Toledo said in a news conference. Brasilia-based Banco do Brasil expects to have 400,000 new U.S. customers in five years, he added.

    The rapid internationalization of Brazil’s economy over the past decade is leading Banco do Brasil to look overseas for growth opportunities. Chief Executive Aldemir Bendine said last month that the bank wants to increase its presence in Europe, Africa and Latin America to offer funding and advisory support for Brazilian companies operating there.

    Banco do Brasil has an option to operate in China as a commercial bank within three years, Toledo said, without elaborating.

    Attempts by Brazilian banks to expand internationally have been met with tough scrutiny from investors. Indications by Itau Unibanco (ITUB4.SA), Banco do Brasil’s main rival, that it could pursue expansion in South America have slowed share price gains.

    In the case of Banco do Brasil, analysts fretted over the potential size of any U.S. acquisition and its impact on the Brazilian lender’s capital and solvency ratios. The acquisition of EuroBank was smaller than most analysts expected.

    “In that sense, the immaterial size of the transaction announced should provide relief to those concerns,” Daniel Abut, a Citigroup analyst in New York, wrote in a note.

    The deal is still subject to approval by Brazilian and U.S. regulators. EuroBank currently has three branches in Coral Gables, Pompano Beach and Boca Raton.

    Banco do Brasil shares fell 0.4 percent to 28.90 reais, while Brazil’s main stock index Bovespa .BVSP was flat on Monday.

    (Editing by Dave Zimmerman and Steve Orlofsky)


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