Category: M&A

Moody’s has put Banco Santander Banespa on positive outlook after the announcement of a proposed acquisition of ABN AMRO by a consortium including RBS, Santander and Fortis. “The potential acquisition of ABN AMRO’s Brazilian operations by Santander would double the existing share of assets and deposits of its subsidiary, Santander Banespa, and would raise it to a leading position in the Brazilian banking system,” says Moody’s. “A potential combination of Santander Banespa and ABN AMRO Real would also generate geographic and business synergies that could favor earnings,” it adds. Moody’s also noted that Santander’s track record of acquisitions and cost streamlining in LatAm would be positive for Banespa’s ratings, owing to gains of scale. As of March 31, Banespa had consolidated assets of 101.3bn reais and 8.6bn reais in equity.

Equity is by far the biggest money spinner for banks in the region, Dealogic data shows. Volume, at $11bn so far this year, is less than a third of M&A ($33bn) or debt ($34bn). But the fee pool is more than twice as big. ECM fees in the year to May 15 were $318m, while M&A paid out $142m and debt $167m, according to Dealogic.

Chilean retailers – D&S and Falabella – have announced their merger, confirming rumors that have been swirling around the market for some time. Upon completion, the shares of D&S will be exchanged for 23% of the shares in the new company; while the shares issued by Falabella will be exchanged for 77% of all the new shares. The merger will create the largest retailer in the market, overtaking market leader Cencosud, with projected sales of $7.8bn against around $6bn by the current market leader. The new entity will also become the second-largest retailer in the region, after Mexican firm Walmex, which recorded turnover last year of $18bn.

Deal activity in the mid-sized bank sector is expected to continue this year, following Bradesco’s January acquisition of Banco BMC for BRL800m and Société Generale’s February purchase of Cacique, for BRL900m, according to panel members at the 6th annual Securitization in Latin America Summit (Silas), a LatinFinance/Euromoney conference in Miami. “It’s pretty much the easiest way for these [big] banks to gain access to middle market [credit portfolios],” Eduardo Lisbôa Rocha, an executive at Boa Eseperança Recebíveis, a São Paulo-based asset securitization shop, tells LatinFinance. “We’ll see more acquisitions throughout the year,” said Rocha, who works with a range of credit providers. On Tuesday, Bradesco’s president Marcio Cypriano told attendees at an investor conference in London that his bank is hunting for assets in the sector. The race for high-yielding credit portfolios is being spurred on by the fact many mid-sized banks are lined up for IPOs. “Big banks are racing to buy up these banks before they go public and get more expensive,” says a São Paulo-based banker.