Banco do Brasil Slumps on Possible Increase of Votorantim Stake

Banco do Brasil SA, Latin America’s biggest lender by assets, fell the most in two months after saying it may increase a stake in Banco Votorantim SA, which reported five straight quarterly losses through September 2012.

Shares declined 2.4 percent to 26.18 reais at 1:11 p.m. in Sao Paulo after earlier falling as much as 4.5 percent in the steepest intraday drop since Nov. 8. The MSCI Brazil/Financials Index slid 0.5 percent.

Banco do Brasil is studying the possibility of increasing its stake in Votorantim, and the transaction would involve only preferred shares of the bank, according to a regulatory filing today. The state-controlled lender in January 2009 bought a 50 percent interest in Votorantim, a bank specializing in corporate and auto loans.

“From what we’ve seen so far, Banco do Brasil’s investment in Votorantim was a terrible decision,” Rodolfo Amstalden, an analyst at consulting firm Empiricus Research, said by phone from Sao Paulo. “Now it’s saying it may inject even more money there.”

Votorantim’s net loss jumped almost five times to 497 million reais in the third quarter of 2012, according to a regulatory filing on Nov. 8.

Banco do Brasil gained 8 percent last year, while the financials index fell 1.3 percent during the period.

To contact the reporters on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net; Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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