Slim’s Inbursa to Mirror Mexico Model in Brazil With Acquisition

Billionaire Carlos Slim is using a $45 million acquisition to participate more formally in Brazil’s financial market, betting it’s the best way to replicate his Mexican bank’s business model in Latin America’s largest economy, his son said.

Grupo Financiero Inbursa SAB (GFINBURO), controlled by Slim, announced the agreement last week to buy Standard Bank Group Ltd. (SBK)’s Brazilian unit as the South African company wound down the division’s operations. The idea is to use the unit as a platform to develop the bank under the same philosophy as Inbursa, said Marco Antonio Slim Domit, the billionaire’s second-oldest son and the chairman of the banking group.

Inbursa is known for a conservative financial approach that has kept it more capitalized than its competitors, Daniel Abut, an analyst at Citigroup Inc., said in a note last week. The company is Mexico’s most diversified financial group, with profits coming from insurance, auto loans and corporate finance, among other areas, Abut said.

“We had previously been participating with Inbursa in credit operations in Brazil, and the size of its economy is very important for the region,” Slim Domit said in an e-mail. “The strategy will be based on the principles and experience of Inbursa, but undoubtedly it will have to be adapted to the local characteristics of the country.”

Brazil’s annual gross domestic product of $2.25 trillion is almost double that of Mexico, Latin America’s second-largest economy, according to data compiled by Bloomberg.

The bank has been signaling its ambition to expand internationally since at least 2008, when it struck a partnership with Spain’s CaixaBank SA. Inbursa has done financial deals outside of Mexico for years. In 2012, its participation in a syndicated loan to YPF SA resulted in Inbursa receiving shares after the Argentine oil producer defaulted.

Same Team

The Mexico City-based bank works closely with Slim’s other businesses in its home market. Small-business customers of Telmex, the landline phone unit of America Movil SAB, can get loans from Inbursa and pay them off through their phone bills. Many of Grupo Sanborns SAB’s stores and restaurants feature Inbursa ATMs.

Inbursa would already have potential partners in Brazil, where America Movil owns phone and cable businesses under the Claro brand. The telecommunications company has said it’s interested in making further acquisitions in the South American country, its second-largest market.

Slim hasn’t been as aggressive as competitors such as Grupo Financiero Banorte SAB and HSBC Plc in expanding his bank’s reach in Mexico. Inbursa’s loan portfolio of 193 billion pesos ($14.6 billion) was sixth among Mexican banks at the end of January, according to government statistics.

Founder Slim

Inbursa was founded by Slim in 1965 -- 25 years before he entered the telecommunications industry that would propel him to one of the world’s biggest fortunes. The bank had 320 branches across Mexico at the end of last year, compared to Banorte’s 1,288.

The acquisition of the Standard Bank unit was announced March 14. Bloomberg News reported in October that Inbursa was in talks to acquire the Standard Bank division.

Banco Standard de Investimentos SA, as the Brazil unit is known, had 244 million reais ($144 million) of assets in the country as of September, 92 percent less than the 2.9 billion reais reported in June 2012, according to central bank data. Total capital decreased 63 percent to 115 million reais.

Standard Bank, based in Johannesburg, established an office in Sao Paulo in 1998 and eventually employed more than 100 people there, according to the company’s website. The Brazil unit has been involved in structured finance, metals trading, commodity finance, foreign-exchange transactions and derivatives trading.

In 2011, Standard began unwinding its expansion strategy in emerging markets and announced asset sales in Russia, Turkey and Argentina to raise cash for investment in Africa. The following year, it completed the sale of 80 percent of its Argentine division for about $400 million to Industrial & Commercial Bank of China Ltd.

To contact the reporter on this story: Patricia Laya in Mexico City at playa2@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Crayton Harrison

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