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"This transaction also underscores Citi’s long-term commitment to a key growth market in Latin America" |
Quinenco, one of Chile’s largest business conglomerates, has 52.2% of voting rights in Banco de Chile, the country’s second-biggest bank, via holding company LQIF. Quinenco is a 100% owner of LQIF. However, with this agreement, Citi will be able to buy up to 50% of LQIF. Citi will at first take a 37.8% stake in the company in a $1 billion deal, with the option to increase this by a further 17.04% for $900 million after the initial transaction is completed. That is expected by the first quarter of next year. Through this partnership, Citi operations in Chile will be combined with Banco de Chile’s local banking franchise and retain up to 20% of the market share in the Chilean banking industry. Citi will also acquire the US businesses of Banco de Chile for $130 million. The deal is subject to regulatory approval.
Citi started talks with the group at the end of 2006 but these ended in January with no agreement: reportedly, Banco de Chile’s controller, Andrnico Luksic, was not willing to give up control.