MercoPress. South Atlantic News Agency

Banco do Brazil interested in Argentina’s fourth largest bank

BB is involved in an aggressive international expansion

Banco do Brazil (BB), Latinamerica’s largest government-managed bank, is in talks with Argentina’s Banco Patagonia, seeking to expand internationally, announced CEO Aldemir Bendime.

The Brasilia-based lender apparently is targeting Banco Patagonia, Argentina’s fourth-largest bank by market value to compete with its biggest rival Itau Unibanco Holding which operates in the country.

“We have been going around the world after opportunities” said Bendime in Brasilia. “We are talking in Argentina with Banco Patagonia and also with other players in Latin America.”

The banks haven’t reached any agreement on a possible partnership, BB said in a statement Tuesday today. Any purchase would mark the bank’s first acquisition outside of Brazil, according to a spokesman in Brasilia.

Banco Patagonia of Buenos Aires said in a separate statement to the local stock exchange that it’s held talks in the last year with BB and hasn’t reached any “strategic” agreement.

Banco Patagonia with a market value of 2.51 billion pesos (657.5 million USD) trades at 6.28 times trailing 12-month earnings compared with 14.6 times for the benchmark Merval index,

Banco Patagonia, controlled by the Stuart Milne family, was formed nine years ago after Banco Mildesa bought Banco de Rio Negro in 1996, according to the lender’s Web site.

In 2003, Patagonia merged with Banco Sudameris Argentina and the following year bought former Lloyds TSB Bank Plc assets in Argentina. Patagonia sold shares in initial public offerings in Argentina and Brazil in 2007.

Patagonia has 154 branches in Argentina, according to the bank’s press department. It was the 12th largest bank in Argentina in terms of deposits as of August, with 5.87 billion pesos, according to the central bank’s Web site.

BB spent 11 billion Reais (6.3 billion USD) in acquisitions in Brazil since May 2008, including the purchases of Banco Nossa Caixa SA and Banco Votorantim SA, according to the lender’s press office.

BB already operates in 23 countries mostly related to international trade, but it is now interested in customer banking in those places with a strong Brazilian presence such as the United States. The bank is targeting remittances.

BB shares are traded in New York following changes introduced to increase foreign investors’ participation from the current 12% to 20%.