Magazine article American Banker

NationsBank Buys into Brazil, Continuing U.S. Return to Region

Magazine article American Banker

NationsBank Buys into Brazil, Continuing U.S. Return to Region

Article excerpt

In a fresh sign of U.S. banks' willingness to put money on the table in Latin America, NationsBank Corp. has acquired a controlling stake in a Brazilian bank.

NationsBank completed the purchase Friday of a 51% position in Banco Liberal, Sao Paolo, which specializes in corporate finance, asset management, and underwriting, a spokeswoman for the Charlotte, N.C.-based banking company confirmed.

Terms were not disclosed, but a source close to NationsBank estimated the price at $50 million.

The acquisition was the fifth by a U.S. bank in Latin America since last January. Forays into Latin America-viewed as the height of folly after the Third World debt crisis of the 1980s-have been gathering steam as U.S. banks expand their retail and corporate banking activities there.

Since January 1997, Wachovia Corp. has bought a Brazilian bank and American Express Bank Ltd. has acquired a 50% stake in one; Citicorp has bought a Mexican bank; and BankBoston Corp. has purchased Deutsche Bank's retail network in Argentina.

Also, Norwest Financial, the consumer finance arm of Norwest Corp., this month acquired Finvercon, an Argentine consumer finance company.

More Latin American deals may be in the wind. J.P. Morgan & Co. is reportedly considering buying up to 20% of Grupo Serfin, Mexico's third- largest bank. A Morgan spokeswoman declined to comment.

The NationsBank spokeswoman said the move into Brazil "allows us to serve our U.S. clients more effectively, gives us a foothold in an extremely active market, and allows us to participate in an enormous number of privatizations expected to take place over the next three to four years."

She added that the acquisition "doesn't put our balance sheet at risk at all since 80% of the bank's income is from fees."

Analysts noted that the NationsBank acquisition is rather small and fits in with the bank's efforts to move beyond the domestic market. …

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