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Itau Deal With Corpbanca Said to Include $650 Million Investment

Itau Unibanco Holding SA will inject $650 million in cash into a new bank to be formed with Chile’s Corpbanca in a deal that may be announced as early as this week, said a person with direct knowledge of the talks.

The investment will ensure Sao Paulo-based Itau has control over the venture, said the person, who asked not to be identified because the deal hasn’t been signed. The agreement won’t involve a tender for stock held by minority shareholders in Corpbanca, the person said. An official at Itau declined to comment on the plan.

Reports last year that Corpbanca was in talks to merge with another bank’s Latin America assets have boosted the firm’s stock 49 percent to 7,031 pesos since Aug. 28. The shares had hit a three-year low that day amid concern the bank might be hurt by financial distress at retailer SMU SA. Santiago-based Corpbanca and SMU are controlled by billionaire Alvaro Saieh.

Candido Bracher, chief executive officer of Itau’s wholesale unit, said Dec. 11 that the Brazilian bank was in talks to buy a stake in Corpbanca. A week later, Spain’s Banco Bilbao Vizcaya Argentaria SA said in a regulatory filing it also was taking part in the sale process. Corpbanca is no longer pursuing talks with BBVA, the person said today.

Cencosud SA, Latin America’s third-biggest retailer, canceled a deal last month to sell its credit-card business to Itau. The Brazilian bank’s talks to buy Corpbanca probably contributed to the deal’s derailment, because Santiago-based Cencosud holds a 51 percent stake in SMU Corp SA, which manages a credit-card portfolio for SMU, said Andre Riva Gargiulo, an analyst at brokerage Grupo Bursatil Mexicano SA in Sao Paulo.

To contact the reporter on this story: Philip Sanders in Santiago at psanders@bloomberg.net

To contact the editor responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net

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