Anti-trust regulators approve Bradesco to buy HSBC Brazil unit

Bloomberg

Brazil antitrust regulators approved Banco Bradesco SA’s acquisition of the local unit of HSBC Holdings Plc, adding a restriction that the buyer refrain from additional purchases for 30 months.
Bradesco will also have to improve quality control, invest in worker training and disclose to its clients the local law that allows customers to switch banks, Cade, the antitrust regulator, said in a ruling in Brasilia. All six members of Cade voted in favor of the acquisition.
The decision comes 10 months after Bradesco announced its plan to buy the unit for US$5.2 billion and narrow its market-share gap with the nation’s three largest banks. Itau Unibanco Holding SA became Brazil’s largest non-state-owned bank after it bought Unibanco in 2009, while government-controlled Banco do Brasil SA and Caixa Economica Federal gained market share after suspended President Dilma Rousseff pushed them to offer more cheap loans.
Bradesco expects to conclude the acquisition in the first half of next month, Alexandre Gluher, an executive vice president, said on a conference call with reporters, adding that the company will fully incorporate results from the HSBC unit into its fourth-quarter earnings statement.
“The acquisition shows the clear confidence of Bradesco in Brazil and in the recovery of the nation’s economy,” Gluher said.
Bradesco will add 174.8 billion reais (US$52 billion) in assets and 850 branches with the acquisition as of the first quarter, according to Brazil’s central bank. It will have a total 1.09 trillion reais in assets, still behind Banco do Brasil, Caixa Economica Federal and Itau, the data show.
HSBC expects the sale of the Brazilian unit to produce a loss of about US$1.7 billion after accounting for foreign-exchange losses, the London-based lender said.
The currency loss won’t impact the regulatory capital that the sale will generate, HSBC said.
HSBC Chief Executive Officer Stuart Gulliver has closed about 80 businesses across the world and exited HSBC’s least profitable countries as he seeks to reassure investors he can boost returns and guide the bank through turbulent markets. The lender’s shares have slumped 17 percent this year amid concerns about slowing growth in Asia.