Banco do Brasil Said to Hire JPM to Sell Patagonia Stake

  • Idea is to find strategic investor or to sell shares to public
  • Itau said among potential bidders for Argentina stake

Banco do Brasil SA, the biggest bank by assets in Latin America, hired JPMorgan Chase & Co. to help sell a stake in its Argentina unit, according to a person with direct knowledge of the matter.

The Banco Patagonia SA stake would go to strategic investors or shares would be sold in a public offering, the person said, asking not to be named because the matter is private. The size of the stake wasn’t known, the person said. Brazilian lender Itau Unibanco Holding SA would consider bidding for the stake if it’s offered to strategic investors, another person familiar with the matter said. Shares of the Argentine bank plunged as much as 3.1 percent on the news.

“We don’t know who the buyer will be, only that there’s a need to sell,” Rafael di Giorno, director at Proficio Investment in Buenos Aires, said by phone. “And with uncertainty it often happens that the market reacts negatively until they see how it’s sold.”

Banco do Brasil, with total assets of 1.4 trillion reais ($430 billion), needs to raise capital as it faces deepening losses from bad loans amid Brazil’s recession. The lender holds about 58.6 percent of Banco Patagonia, which has total equity of about $2.3 billion, according to Argentina’s stock exchange. Patagonia is the 11th-biggest bank in the country with 55.8 billion pesos in assets, according to the central bank.

Banco do Brasil shares rose as much as 2.3 percent in Sao Paulo Thursday, leading advances among banks. Shares of Banco Patagonia closed 1 percent lower at 48 pesos and the volume of shares changing hands on Thursday was 211 percent higher than the three-month average.

Other banks including Banco Santander SA, Banco Macro SA, BBVA Frances and Banco de Galicia y Buenos Aires SA may find the Banco do Brasil’s stake most attractive, Juan Manuel Vasquez, a corporate analyst at Buenos Aires-based brokerage Puente Hnos SA.

“Banco do Brasil SA is running out of options to weather the impact on earnings of Brazil’s economic crisis,” wrote Jonathan Tyce and Arjun Bowry, analysts at Bloomberg Intelligence. If capital concerns persist, asset sales may be necessary, they wrote.

JPMorgan, Banco do Brasil and Itau officials declined to comment.

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