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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (11403)	1/11/1999 3:18:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Deutsche Bank Cuts Brazil's Itausa, Unibanco To Neutral Dow Jones Newswires NEW YORK -- Deutsche Bank downgraded Monday Brazilian holding group Itausa (E.ITU) and bank Uniao de Bancos Brasileiros SA (UBB), or Unibanco, to "neutral" from "outperform," saying it expected lower profitability in the next two years. In a note to investors, analyst Celso Boin said that Brazilian banks must offset losses from the expected fall in interest rates by reducing administrative costs, boosting fee revenues and seeking higher spread assets. The downgrade of Unibanco reflected concerns that the bank could face a takeover or merger which would hurt minority investors, Boin said. In Itausa's case, profits could be hit by the poor performance of its consumer electronics subsidiary Itautec-Philco, Boin added, which is expected to report a loss in 1998. The investment house maintained Banco Bradesco SA (E.BBR) and Banco do Brasil SA (E.BDB) at "neutral," and Banco do Estado de Sao Paulo SA (E.BEP) and Banco Itau SA (E.BIT) at "outperform."

To: Steve Fancy who wrote (11403)	1/11/1999 3:25:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Leave it to Deutsche Bank to downgrade a stock with a fair value almost three times current price. They said: In a note to investors, analyst Celso Boin said that Brazilian banks must offset losses from the expected fall in interest rates by reducing administrative costs, boosting fee revenues and seeking higher spread assets. ...yet the current fear is largely based on the fact that interest rates will not fall that quickly. Seems if and when they do fall, economic conditions are improving providing the catalyst to increase earnings. Further they say: The downgrade of Unibanco reflected concerns that the bank could face a takeover or merger which would hurt minority investors, Boin said. While other analysts have recently commented how this would be a plus. What am I missing here? I seriously question Deutsche Bank's motives though in fairness much of what they have to say does not fit my agenda. sf