Sept. 17 (Bloomberg) -- Banco do Brasil SA, Latin America’s largest lender, rose to the highest since June 2008 after the government increased the limit for international ownership and authorized a program to sell American depositary receipts.

The federally controlled bank increased 1.2 percent to 29.60 reais in Sao Paulo trading.

The government is allowing international investors to hold up to 20 percent of Banco do Brasil’s shares, up from a previous 12.5 percent limit, the Brasilia-based lender said in a statement today. The government also authorized the bank to sell ADRs linked to voting shares.

“We are talking about two movements that aim to improve the attractiveness of the shares,” Marco Geovanne Tobias da Silva, Banco do Brasil’s investor relations manager, said in a telephone interview. “We are increasing the number of potential investors to our shares.”

The lender may sell ADRs that trade over the counter, or Level I, this year and it already selected a bank to advise on the sale, Tobias da Silva said, declining to name the bank.

“This will allow greater participation of foreigners in the trading and will increase visibility to the shares,” said Kelly Trentin, an analyst with SLW Corretora de Valores e Cambio Ltda in Sao Paulo. “This is all very good news.”

Trentin has a “hold” recommendation to the stock.

More than 11 percent of Banco do Brasil shares currently are held by international investors, Tobias da Silva said.

Increasing Free Float

The lender has a deadline of June 2011 to boost its free float from about 22 percent to 25 percent, as required by rules from the Novo Mercado, a section of the Sao Paulo stock exchange that requires heightened corporate governance standards.

Banco do Brasil shares have more than doubled this year, compared with a 62 percent gain in the Bovespa index and a 99 percent advance in the MSCI Brazil/Financials Index. The lender surpassed Itau Unibanco Holding SA as the region’s largest bank by assets in the second quarter as acquisitions and lower interest rates enabled it to expand credit faster than rivals.

HSBC Holdings Plc.’s analysts, led by victor Galliano, yesterday increased the shares to “neutral” from “underweight” and the share-price forecast to 30 reais from 21.50 reais due to stronger credit growth compared with its peers.

To contact the reporters on this story: Telma Marotto in Sao Paulo at tmarotto1@bloomberg.net

Last Updated: September 17, 2009 17:02 EDT