Citigroup Sale of Brazil Unit May Face Deeper Antitrust Review

  • Bank industry already highly concentrated, Cade member says
  • U.S. bank has said it wants to drop retail unit in Brazil

Citigroup Inc.’s sale of its Brazilian unit should face tougher scrutiny from the nation’s antitrust office because the local banking industry is already highly concentrated, one of the agency’s regulators said.

Any banking mergers should immediately be deemed “complex,” Cristiane Alkmin Junqueira Schmidt, a member of the agency, said Wednesday. “I am really uncomfortable approving any transaction in the banking industry, especially one made by the nation’s four biggest banks.”

Citigroup said in February it would sell its retail-banking and credit-card operations in Brazil. Chief Executive Officer Mike Corbat has been scaling back Citigroup’s retail footprint to simplify the company, cut costs and boost returns.

State-controlled Banco do Brasil SA and Caixa Economica Federal along with Itau Unibanco Holding SA and Banco Bradesco SA are the nation’s four biggest banks by assets, according to the central bank. Cade, the antitrust agency, on Wednesday unanimously approved Bradesco’s acquisition of the local unit of HSBC Holdings Plc, adding a restriction that the buyer refrain from additional purchases for 30 months. The agency had previously said that deal required more extensive review than normal, also because of concern about concentration in the market.

An official at Citigroup declined to comment.

Schmidt said Cade should make part of any future merger reviews all the acquisitions done by the banks involved for the previous five years. Banks should also disclose all the efficiency gains resulting from the proposed combination.

Before it's here, it's on the Bloomberg Terminal.