Itau to Buy 51% of Cencosud’s Chile Credit-Card Unit
(Corrects date in last paragraph.)
Itau Unibanco Holding SA, Latin America’s largest lender by market value, will become the biggest credit-card operator in Chile after agreeing to manage the in-house cards of Santiago-based retailer Cencosud SA. (CENCOSUD)
Itau will buy 51 percent of the credit-card operations of Cencosud in Chile and Argentina for $307 million, and fund 100 percent of future credit-card loans in both countries, the companies said in a statement yesterday.
“This is a strategic growth opportunity,” Cencosud’s Chief Executive Officer, Daniel Rodriguez, told reporters in Santiago yesterday. “This partnership will help us build up and strengthen the credit-card business.”
Itau will have about 2.3 million cards in Chile once the deal is completed, with an outstanding loan portfolio of $1.3 billion, according to the statement. The bank will pay $280 million for the Chilean operations and $27 million for the Argentine unit. Cencosud will use the payment to pay down debt and fund expansion plans, Rodriguez said.
Cencosud, Latin America’s third-largest retailer by sales, said in a filing to Chile’s regulator last week it was negotiating a deal with banks to handle its credit-card operations in Argentina and Chile, without specifying which banks. Santiago-based Diario Financiero had reported the day before that the retailer was in talks with Itau.
Cencosud signed in August 2011 a deal with Brazilian lender Banco Bradesco SA to operate branded credit cards for Cencosud’s supermarkets in Brazil.
In May, Cencosud said it would set aside provisions of 20 billion pesos ($40 million) after Chile’s Supreme Court ordered the retailer in April to compensate clients affected by “abusive” clauses on its credit-card contracts.
Rodriguez said yesterday that the deal with Itau had “nothing to do” with the court’s fine and that the two companies had been negotiating the accord for 10 months.
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