Brazil's Banks Remain Attractive Despite
Turmoil: Goldman
Dow Jones Newswires
RIO DE JANEIRO -- The Brazilian banking sector remains attractive to
international banks looking to expand in Latin America despite the market
turmoil that has all but vaporized local banks' share prices, a Goldman,
Sachs & Co. partner said Tuesday.
"Can you give me any reason for Unibanco's ADRs to go from $42 to $7
1/2 on the New York Stock Exchange?" said John Oros, who is in charge
of Latin American financial institutions at the U.S. securities firm. "That has
to do with American investors' panic, not Unibanco."
Oros said that Spanish banks, which have made an aggressive push into
Brazil and are now being punished for their exposure here, will eventually
be rewarded for their strategy.
"I think the long-term expansion by Spanish banks will prove to be a wise
move," he said. "Their moves are careful, they are appropriate and they
are moving earlier than others."
Goldman and Brazil's Banco Pactual SA advised Brazil's Minas Gerais
state government in the Monday sale of state-run bank Bemge. Banco Itau
SA, Brazil's No. 2 private bank, outbid No. 1 Banco Bradesco SA to
acquire Bemge for a premium of 85.6% over the minimum bid price.
"One of the reasons (Bemge's price was so high) is because there's not a
lot that one can buy in Brazil with good franchises and clean balance
sheets," Oros said.
The next large transaction in the sector will be the privatization of Banco
do Estado de Sao Paulo SA, known as Banespa (E.BEP), which is
scheduled to take place in the first quarter of 1999.
"Bradesco and Itau will be very tough competition," Oros said. "It's going
to be very difficult for international banks, though not impossible."
He said U.S. banks have a lot of room for expansion via mergers and
acquisitions in their domestic market, especially interstate banking.
Brazilians will eventually see U.S. banks making a push into retail, but not
immediately.
"It's on their list of priorities but it's not the highest priority," Oros said.
-By Geraldo Samor; 55-21-580-9394; gsamor@ap.org
|
