Banco Bradesco SA Brazil’s No. 2 private-sector bank has begun exclusive talks to acquire HSBC Holdings Plc’s Brazilian unit, according to a person with direct knowledge of the transaction who talked to Reuters.
In the event that HSBC accepts Bradesco’s binding offer, a deal could be announced before the end of the month, said the source, who requested anonymity because the process is private. The bid values HSBC Bank Brasil Banco Múltiplo, as the unit is formally known, at about BRL 12 billion (US$ 3.75 billion), or 1.2 times book value, the source added.
The source did not say whether Bradesco will pay in cash for the unit, which had assets of about BRL 170 billion at the end of March. Sources familiar with the plans announced last month that HSBC expected to have the sale finalised by August.
The run-up to HSBC Brasil’s sale has quickly gathered momentum since the plans were first made public in May. Analysts say that HSBC’s exit from Brazil comes as large local lenders outperform smaller rivals and gain more muscle to ride out a deteriorating economic outlook.
Slow asset growth prevented HSBC Brasil from gaining scale to win market share, leading return on equity to post a negative 4.2 percent last year, compared with 15.5 percent at the end of 2011.
Representatives at Bradesco could not be reached for comment to Reuters. A spokesman for HSBC in São Paulo declined to comment to the agency.