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Itaú Gains Two Kinds of Capital

Dec 1, 2002

By buying local competitor BBA Creditanstalt, Brazil's second-largest private sector bank substantially grows its assets and gains the talent inside a well-run wholesale franchise.

Brazil's banking sector entered a new phase of consolidation in November when Banco Itaú bought a 95.75% stake in Banco BBA Creditanstalt, including the 47.79% stake owned by Germany's HVB Group, for R$3.275 billion ($897.5 million). Banco Itaú is the second- largest private sector bank in Brazil and its acquisition of BBA enlarges its assets by 21% to R$120 billion ($33.6 billion). It also becomes the country's best capitalized bank, with a risk adjusted capital ratio of 18.4%. International banks, hit hard by losses in Argentina and weak third-quarter earnings results, are retreating from Latin America. Roberto Setúbal, president of Banco Itaú, says their departure presents an opportunity for Banco Itaú to consolidate its presence in the Brazilian market.

BBA's wholesale banking franchise complements Itaú's...

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