Bradesco acquires HSBC Brazil for $5.2 billion

Brazil´s Bradesco said it has reached an agreement with HSBC Latin America Holdings (UK), Ltd., for the acquisition of 100 percent of HSBC Bank Brasil S.A. for $5.2 billion, Bradesco CEO Luiz Carlos Trabuco confirmed at a Monday press conference.

¨We will take over all operations of HSBC Brazil," Trabuco said. The assets acquired include all HSBC activities in Brazil related to retail, insurance and asset management, including all agencies and branches, and is subject to regulator approval.

¨It has an intangible value to shorten our evolution time in our growth process,¨ Trabuco said, adding that the resulting institution will be bigger, but more efficient, as there is little overlap in branches. Trabuco said there is a scarcity in Brazil of similar-quality assets that can be purchased.

¨We have a positive view regarding Brazil in the medium and long run,¨ Trabuco said.

Bradesco said HSBC has 5 million account holders, 851 branches and 4,728 ATMs in Brazil.

The purchase will help Bradesco consolidate its market share in several regions and reinforce its presence in higher-income segments, Bradesco said.

The purchase will allow Bradesco to expand its total assets by 16 percent, while the total volume of deposits will increase by 16 percent. The total loan portfolio will increase by 14 percent. Bradesco will realize an increase of 19 percent in the number of account holders and 16 percent in the number of branches, Bradesco said.

Separately, HSBC said the amount of transactions represents a price-to-book ratio of 1.8, based on June 30 accounts.

The sale of HSBC Brazil represents a significant step in HSBC’s stated goal to optimize its global network and reduce complexity, outlined during the HSBC investor update in June, HSBC said.

“We announced at our Investor Update on 9 June that we were targeting a series of actions to generate increased value for shareholders. I am pleased to be able to announce today a transaction which achieves both a solid financial outcome and swift delivery of one of our stated actions,” Stuart Gulliver, Group CEO of HSBC, said Monday in a statement.

HSBC plans to maintain a presence in Brazil to serve large corporate clients with respect to their international needs, HSBC said.

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BCO Bradesco S.A.

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