The share of total assets held by Brazil's five largest banks rose to 65.72% at the close of 2008, up more than 13 percentage points from the end of the previous year, according to Central bank figures quoted by financial and business daily Valor.
The sharp increase in asset concentration was due to different mergers announced last year that increased the strength of the country's largest financial institutions, the newspaper said. As of December 31, 2007, the five largest Brazilian banks by asset volume were, in order: Banco do Brasil (government-controlled), Bradesco, Itau, Caixa Economica Federal (government-owned) and Banco Real. The five had total assets of close to 1.3 trillion Reales (equivalent to 557.94 billion USD at the current exchange rate), which represents 52.32% of the total for Brazil's financial system, according to the central bank figures. Last year, Itau acquired Unibanco and became the largest bank in all of Latin America; Banco do Brasil acquired Nossa Caixa; and Spain's Santander bought Real to take its place on the list of the country's largest banks. The five biggest financial institutions held close to 2.04 trillion Reales (875.54 billion USD at the current exchange rate) in assets, equivalent to 65.72% of the nationwide total. The acquisitions also changed the rating with the list now headed by Itau and followed by Banco do Brasil, Bradesco, Santander and Caixa Economic Federal. According to Marcio Torres, an expert with the Serasa consulting firm who was interviewed by Valor, acquisitions are likely to continue in 2009 because "the consolidation process is not going to stop." He added that the global financial crisis also will lead to greater consolidation because it will prompt customers to move their deposits to the larger banks. "The next three years will be of intense competition in the Brazilian financial sector, especially among the larger banks, and in that sense there's still room for further consolidation" according to a report released last month by Banco Fator.