Itau, Unibanco in Brazil Merge

123jump.com Staff
03 Nov, 2008
New York City

Merger of two Sao Paolo banks Itau and Unibanco will create the largest financial group in Latin America and sixth largest in the Americas. The newly merged bank is named Itau Unibanco Holding will be controlled 66% by the shareholders of Itau.

[R]9:55 a.m. New York – Two Brazil based banks Itau and Unibanco agreed to a merger to form the largest financial group in Latin America.[/R]

Banco Itau and smaller private bank Unibanco agreed to merge and form the largest financial group in Latin America with total asset base of 575.1 billion reais or $324 billon. The banks are based in Sao Paolo, Brazil.

The merger between the banks is a sign that widening U.S. financial market crisis is spreading to banks around the world as credit markets tighten and Brazilian currency falls.

Chief executive Roberto Setubal will lead the newly merged company and Pedro Moreira Salles, the current chief executive of Unibanco will be the chairman of the merged bank. Unibanco will name 6 of the 14 board member in the newly merged banks.

The bovespa index has fallen nearly 42% on the worries that the global economic growth will slow down and lower the exports of commodities from Latin America. Brazil was expected to weather the collapse of banks and mortgage markets in the U.S. but the banks around the world have experienced losses of more than $675 billion.

The newly merged bank Itau Unibanco Holding will have 66% control from holding company that controls the Itau Bank and 33% will be controlled by the shareholders of Unibanco Participacoes. Itau Investimentos SA and Unibanco largest shareholders will hold 50% each voting stocks in the new bank and

The deal still needs approval from regulators and central bank of Brazil has been in the works for the last fifteen months according to a joint statement.

Itau Unibanco will be ahead of state controlled bank Banco do Brasil with a total asset of $261 billion and Bradesco with $221 billion.

The newly merged bank will be the sixth largest bank in the Americas led by JP Morgan Chase with $142 billion in market cap and Bradesco with $34 billion Santander with $20 billion and Banco do Brasil with $17.7 billion market cap.

The merged bank will have a market cap of $41 billion.

Banco Itau ((ITU)) surged $1.13 to $12.18 and Unibanco ((UBB)) soared $4.65 to $67.73 in New York trading at 9:50 a.m.