Itaú expands Andean reach with CorpBanca deal
In the largest-ever bank merger in Chile, Itaú-Unibanco grows its market share and sets a foothold in Colombia
Chile's CorpGroup agreed to merge its banking operations
with Itaú Unibanco late Tuesday, in a deal that expands
the Brazilian brand in Chile and Colombia and gives it a
platform for further growth.
The Brazilian lender will take a 33.58% stake in the new
Chilean bank, to be branded Itaú, and become controlling
shareholder. CorpBanca's existing shareholders will hold the
remainder. Itaú will inject $652m of equity to its
Chilean subsidiary ahead of the merger to capitalize the new
institution and prepare it for future growth.
The agreement makes Itaú the fourth largest Chilean
retail bank - until now it ranked seventh - growing its market
share there from 4% to 12%. It will also gain a foothold in the
fast-growing Colombian market, through CorpBanca's operations
The deal is thought to address a desire at CorpBanca expand
in Chile through acquisition. As well as giving Itaú a
more solid position in Chile and an entry into Colombia, it
offers a platform to move into other markets like Peru and
Central America, said Mark Rosen, head of investment banking
for Latin America at Bank of America Merrill Lynch, which with
Goldman Sachs was advisor to CorpBanca. Itaú BBA advised
"This is the most significant strategic alliance for
Itaú that they've made outside Brazil so far," he said.
"Nothing they've done in the past is of the scale of this
transaction. It's a transformational deal for the international
business of Itaú."
The deal is the largest merger of financial institutions in
Chile, and the largest in Latin America since 2008.
The transaction is "solidly cash accretive to earnings per
share", said Rosen: "It significantly improves the capital base
of CorpBanca. And there are significant synergies."
The deal comes after extensive talks which began in
mid-2013. Spanish lender BBVA was understood to also be
discussing an acquisition of CorpBanca.
CorpBanca is 45.26% owned by CorpGroup. Moody's downgraded
both entities in December, citing contagion concerns from
related company SMU. It rates CorpBanca Baa3. Standard &
Poor's rates the bank BBB, downgrading it in August after
CorpBanca bought Helm Bank in Colombia. LF
See LatinFinance's Daily Brief on Thursday
for further analysis of the transaction.