Citigroup Sells Brazil Retail Unit to Itau for $220 Millionby and
Bank agrees to acquire Citi’s 71 branches in the country
Itau to acquire about $11 billion in deposits, assets
Itau Unibanco Holding SA, Latin America’s largest bank by market value, agreed to buy Citigroup Inc.’s retail-banking business in Brazil for 710 million reais ($220 million), taking over operations that the U.S. company has maintained in the country for more than 100 years.
The purchase includes Citi’s 71 branches in the South American country as well as its deposits, insurance brokerage, credit cards and loan portfolio, Sao Paulo-based Itau said in a regulatory filing Saturday. Citi has about 35 billion reais in deposits and assets under management in Brazil, according to the document.
The acquisition reinforces Itau’s presence in the wealth segment, which accounts for the majority of Citi’s customers in Brazil, Marcelo Kopel, Itau’s investor relations officer, said in a separate e-mail Saturday. Citigroup Chief Executive Officer Michael Corbat has been shrinking the company’s retail footprint to simplify the firm, cut costs and boost returns. The bank announced plans to exit Brazil and Argentina in February, and said in October 2014 that it would drop consumer banking in 11 markets, including Peru, Costa Rica and four others in Central and South America.
Speaking to reporters in Washington, Finance Minister Henrique Meirelles stressed that Citi isn’t existing Brazil; only its money-losing retail operations. The company isn’t selling its wholesale business, which includes investment banking.
“I was with the president of Citi yesterday and he assured me that Brazil is indeed a priority and that for areas in which Citi is strong globally, including Brazil, it will continue investing ever more,” Meirelles said. “It’s a strategy to focus on its operations that are strongest.”
The sale to Itau still needs to be approved by Brazil’s central bank and the nation’s antitrust agency, known as Cade. Regulators probably will give the acquisition an extra layer of scrutiny because the local market is already highly concentrated, Cristiane Alkmin Junqueira Schmidt, a member of Cade, said June 8.
Citigroup, which gets more revenue from outside its home market than any of its U.S. competitors, maintains a consumer-banking presence in 19 countries.