Bradesco Cancels $757 Million Capital Raise as Brazil Slumps

  • Capital increase was approved by shareholders in December
  • Decision comes after Brazilian equities drop most since 2011

Banco Bradesco SA, Latin America’s second-largest bank by market value, canceled a 3 billion-real ($757 million) capital raise amid a stock-market rout that sent the benchmark gauge near a seven-year low.

Investors still need to approve the board’s plan to cancel the sale, the Osasco-based bank said Wednesday in a regulatory filing.

Brazilian equities tumbled the most since 2011 on Tuesday, with banks leading the drop amid concern higher provisions for bad loans and rising delinquency rates will hurt profits. Bradesco’s voting shares fell 4.2 percent on Tuesday to 19 reais, while the preferred shares lost 4 percent to 17.85 reais. They rebounded Wednesday, climbing more than 5 percent each as of 2:16 p.m. in Sao Paulo.

Bradesco had planned to sell 82.6 million new voting shares at 19.20 reais each and 82.2 million preferred at 17.21 reais apiece, a move that was approved by shareholders on Dec. 17.

Last week, the lender reported a 27 percent jump in provisions for bad loans in the fourth quarter and said the total would rise again this year. Bradesco said lending would increase between 1 percent and 5 percent this year, after expanding 4.2 percent in 2015, below the bank’s forecast.

In August, Bradesco agreed to buy HSBC Holdings Plc’s unit in Brazil for $5.2 billion, a transaction the nation’s antitrust authority said Monday will need a deeper review.

Brazil’s benchmark Ibovespa gauge hit the lowest level since 2009 on Jan. 26. The index is down 9.8 percent in 2016, and has fallen for three straight years.

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