Oct. 27 (Bloomberg) -- Banco do Brasil SA, Latin America’s largest lender, plans to raise its stake in pension fund manager BrasilPrev Seguros e Previdencia SA to 75 percent from 50 percent through an agreement with Principal Financial Group Inc.

Banco do Brasil branches will distribute retirement products sold exclusively by BrasilPrev for 23 years, according to a statement sent to market regulators today. In exchange, the state-controlled lender will own 100 percent of new non-voting shares of BrasilPrev, reducing Principal’s stake in the company to 25 percent from 46 percent.

Principal, based in Des Moines, Iowa, will buy voting shares equal to a 4 percent stake from Servico Brasileiro de Apoio as Micro e Pequenas Empresas in BrasilPrev. The amount involved in the transactions wasn’t disclosed.

Banco do Brasil is focusing on insurance and retirement because they are “very promising sources of revenue as the economy grows,” said Jayme Alves, an analyst at Spinelli Corretora in a phone interview from Sao Paulo. He has a “buy” recommendation for the stock.

Banco do Brasil and Principal also said they are interested in buying Mapfre Nossa Caixa’s private pension portfolios.

Banco do Brasil shares slipped 1.3 percent to 29.68 reais in Sao Paulo trading at 11:41 a.m. New York time. The shares have jumped 102 percent this year, compared with a 71 percent gain in the Bovespa index.

-- With assistance from Francisco Marcelino in Sao Paulo. Editor: Kara Wetzel

To contact the reporters on this story: Camila Fontana Correa in Sao Paulo at cfontana@bloomberg.net; Laura Price in London at lprice3@bloomberg.net.

Last Updated: October 27, 2009 12:03 EDT