MercoPress, en Español

Montevideo, June 21st 2018 - 08:14 UTC

Bradesco buys HSBC operations in Brazil for 5.2bn dollars

Tuesday, August 4th 2015 - 09:27 UTC
Full article 15 comments
The deal between Bradesco and Europe's largest bank includes the latter's Brazilian retail banking and insurance units. The deal between Bradesco and Europe's largest bank includes the latter's Brazilian retail banking and insurance units.
CEO Luiz Carlos Trabuco promised to integrate HSBC Brasil fully into Bradesco's retail banking insurance platform within the next three to four years CEO Luiz Carlos Trabuco promised to integrate HSBC Brasil fully into Bradesco's retail banking insurance platform within the next three to four years
”A transaction which achieves both a solid financial outcome and swift delivery of one of our stated actions” said HSBC CEO Stuart T. Gulliver ”A transaction which achieves both a solid financial outcome and swift delivery of one of our stated actions” said HSBC CEO Stuart T. Gulliver

Brazil's Banco Bradesco SA agreed to buy HSBC Holdings Plc's Brazilian unit for a surprisingly high 17.6 billion reais ($5.2 billion), narrowing the gap with larger rivals while boosting its base of affluent customers in Latin America's largest economy.

 The deal between Bradesco and Europe's largest bank includes the latter's Brazilian retail banking and insurance units. The agreement, which still requires regulatory approval was sealed on July 31.

The all-cash acquisition will allow Bradesco to close the asset gap with larger rivals Itaú Unibanco Holding SA and state-controlled banks Banco do Brasil SA and Caixa Econômica Federal. HSBC Brasil's focus on high-income customers fits well into Bradesco's plan to ramp up sales of specialized financial services for the wealthy and larger corporations.

The purchase price, which could change to reflect the net asset value of both businesses, is equivalent to 1.8 times book value, far above what analysts expected and above Bradesco's own valuation.

Chief Executive Officer Luiz Carlos Trabuco, speaking on a conference call, promised to integrate HSBC Brasil fully into Bradesco's retail banking insurance platform within the next three to four years.

Analysts, who estimated that Bradesco could deduct as much as 6.5 billion reais in goodwill from the HSBC acquisition, were skeptical of the goal. Francisco Kops, an analyst with J Safra Corretora, said it will take at least five years for HSBC assets to be fully integrated into Bradesco.

On the other hand, HSBC's sale of its Brazilian business represents a retreat from the second-largest emerging market economy after years of disappointing performance.

HSBC, which arrived in Brazil late in the 1990s, never gained enough size to pose a real threat to Itaú, Bradesco or Banco do Brasil, the nation's top lender by assets. HSBC Brasil has 854 branches and 21,000 employees. Its assets of about 170 billion reais represent about 2.3% of the total for Brazil's banking system.

HSBC, Europe's largest bank by market value, was advised on the deal by its own investment banking unit and Goldman Sachs Group Inc. Bradesco was advised by its Bradesco BBI investment.

HSBC had announced in June that it would sell its operations in Brazil as part of a wider restructuring plan to cut costs, reduce risk and increase its focus on Asia.

“We announced at our investor update on June 9 that we were targeting a series of actions to generate increased value for shareholders,” Stuart T. Gulliver, the chief executive of HSBC, said in a statement on Monday. “I am pleased to be able to announce today a transaction which achieves both a solid financial outcome and swift delivery of one of our stated actions.”

The bank based in Britain generates more than half of its earnings in Asia, plans to shed as many as 50,000 jobs and sell several underperforming businesses as part of the overhaul. HSBC said it planned to maintain a smaller presence in Brazil to “serve large corporate clients with respect to their international needs.”

Categories: Economy, Investments, Brazil.
Tags: Bradesco, Brazil, HSBC.

Top Comments

Disclaimer & comment rules
  • Brasileiro

    The Brazilian financial system and the BRICS has systematically abandoning financial institutions and Western methods of payment.

    Credit cards Visa, Mastercard, Diners and American Express has been losing ground in the Brazilian market for ELO flag that is 100% Brazilian. The ELO cards are already being operated in Russia and soon also in China, India and South Africa.

    Soon the international financial transfers from Western Union will be restricted to shipping or receiving shipments to the United States and Canada. It is already being implemented a system operated by the BRICS to replace Western Union and SWIFT worldwide.

    In addition to minimizing dependence on Western financial institutions would be a way to end some of the sanctions imposed on Russia.

    And now a beautiful video of Rio de Janeiro:

    https://www.youtube.com/watch?v=u-nDipPw-jU&list=FLmXPTu1f8AdGlizWNiASx2A

    Aug 04th, 2015 - 10:38 am 0
  • ilsen

    Or possibly Western companies are leaving Brazil before it becomes Argentina, or even Venezuela?

    And now....
    How about a nice video of the dead dogs and raw sewage in the Olympic Aquatics waters?
    C'mon brasso , they are easy to find! http://fusion.net/story/40671/why-brazils-summer-games-could-be-the-shittiest-olympics-ever/

    Aug 04th, 2015 - 02:55 pm 0
  • Jack Bauer

    @1 brasshole
    “The Brazilian financial system and the BRICS has systematically abandoning financial institutions and Western methods of payment ”

    Interesting statement.....and what is Brazil going to adopt in their place ??

    The rest of your post is pure crap, too stupid to even read to the end.

    Aug 04th, 2015 - 03:38 pm 0
Read all comments

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!