Banco Santander Brasil SA (SANB11), the Brazilian unit of Spain’s biggest bank, agreed to invest 460 million reais ($205 million) in a payroll-lending joint venture with Banco Bonsucesso SA.
Under the agreement, Santander Brasil will get a 60 percent stake in the venture, while Bonsucesso will hold the remaining 40 percent, according to a regulatory filing today. Bonsucesso will transfer its entire payroll loan book into the joint venture, which depends on regulatory approval.
“The operation will create a structured external channel with a partner that has proven expertise in payroll loan business,” Santander Brasil said in the statement. Bonsucesso, based in Belo Horizonte, will offer payroll lending only through the venture. Santander, based in Sao Paulo, will continue using its own network as well to generate the loans deducted directed from borrowers’ paychecks.
The deal will help Santander Brasil, which accounted for 20 percent of the parent group’s first-quarter profit, revive its slumping payroll-lending business. Santander Brasil’s portfolio of loans backed by automatic payroll deductions fell 15 percent to 12.8 billion reais in the year through March. That compares with an increase of 52 percent, to 24.7 billion reais, at Itau Unibanco Holding SA, the nation’s largest bank by market value.
Itau expanded its payroll lending operations in Brazil through a 2012 joint venture with Banco BMG SA.
Santander Brasil said its net income rose 2 percent to 1.44 billion reais in the second quarter from a year earlier, according to a separate filing today.
To contact the editors responsible for this story: Peter Eichenbaum at firstname.lastname@example.org Cindy Roberts, Mark Bentley