Brazil: Itaú wins Carrefour as government fights bubble
Extensive retail finance acquisition; Sector still strong despite government curbs
Itaú’s winning bid for Banco Carrefour, 11.6 times 2010 earnings
The Brazilian government’s attempt to dampen consumer spending and slow inflation didn’t appear to lessen the attraction to Itaú Unibanco of 49% of Banco Carrefour. Itaú outbid its rivals for the large and established retail finance operation, providing Itaú with the credit services offered in Carrefour’s Brazilian stores. These encompass a total of 7.7 million accounts, 11 million issued cards and a loan portfolio of $1.42 billion. Banco Carrefour posted a net income of R$155 million ($99 million) in 2010.
In early April the government had responded to rising inflation and fears about a credit bubble by doubling the tax that applies to goods bought in instalments over more than one year, excluding mortgages, to 3%.
Twelve-month inflation in Brazil reached 6.3% in March, close to breaking through the central bank’s target of 4.5% plus or minus 2%, as the government tries implementing measures other than raising interest rates, fearing further currency appreciation.