Bradesco Buys BMC

Bradesco, Brazil’s second-largest private bank, has bought local, niche bank BMC, the bank announced in a note to Bovespa. It paid $375.6 million (800 million reais) in shares for the São Paulo-based payroll and retirement loans specialist. The exchange of stocks will be as follows: 600 million reais at the time of sale and 200 million reais depending on the performance of BMC in the next two years. During this period, Bradesco will manage BMC as an independent structure, maintaining its main executives. According to a filing with Brazil’s securities commission, CVM, Bradesco will increase capital by an equal amount to pay for the acquisition, worth 0.94% of Bradesco’s capital. The new shares will be issued at the close of the acquisition, expected by the end of the first half of the year. Bradesco is looking to expand and diversify its loan portfolio with the acquisition, which will give it an extra 2 billion reais of loans. Goldman Sachs advised BMC, while Bradesco’s investment banking unit Bradesco BBI advised the larger bank. Following the news of the acquisition, ratings agency Fitch placed the foreign-currency, long-term IDR rating assigned to Banco BMC on rating watch positive.