Itau, Bradesco, Santander Seen Likely To Present Bids for HSBC's Brazil Unit

By Rogerio Jelmayer And Luciana Magalhaes 

        SAO PAULO--Brazil's Itau Unibanco Holding SA, Banco Bradesco SA and Banco Santander Brasil SA plan to present formal offers to buy the Brazilian unit of HSBC Holdings PLC by Monday, according to two people close to the talks.
        HSBC will likely sign an agreement soon after to hold exclusive talks with the bank offering the best bid, said one of the people.
        HSBC declined to comment Friday on the subject.
        The bidding banks have already started their due diligence processes on the Brazilian operations of HSBC and a final sale agreement may be announced in July or August, a third person said.
        Both Itau and Bradesco are based in Brazil, and Santander is the local unit of Spanish lender Banco Santander SA. The banks' press departments declined to comment for this article.
        HSBC hired Goldman Sachs to coordinate the sale.
        Bradesco appears to be the best fit to acquire the local unit of HSBC according to Credit Suisse's banking analysis team. "We see Bradesco as the strongest candidate, given the combination of a strong capital base, lower overlap versus peers and a Brazil-centric strategy," it said in a recent research report for its clients.
        According to analysts, HSBC's Brazilian unit is worth between 10 billion reais and 14 billion reais ($3.22 billion to $4.51 billion). The sale of the unit won't meaningfully affect the competitive landscape of Brazil's financial sector because of HSBC's modest market share in the country, of close to 3%, Fitch Ratings said in a recent research report.
        "A winning bidder among Itau, Bradesco or Santander Brasil would only modestly increase the concentration in the Brazilian banking and asset management industries, not raising systemic credit risks, in our view," the rating agency said.
        Last month, Bradesco President Luiz Carlos Trabuco Cappi, said that the bank would make a formal offer for the HSBC operation by July, but he declined to provide more details at the time. In May, Santander Brasil's chief executive officer, Jesus Zabalza, said Santander was also considering a bid.
        In June, HSBC CEO Stuart Gulliver said it would reduce its global head count by up to 50,000 as part of an overhaul intended to improve the profitability of its sprawling operations. The bank said at that time that it would sell its operations in Turkey and Brazil, but still retain a presence in the South American country to offer services to large corporate clients.
        Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and Luciana Magalhaes at Luciana.Magalhaes@dowjones.com
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        (END) Dow Jones Newswires

        July 03, 2015 11:04 ET (15:04 GMT)

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