"I think that the local banks are doing a very good job and they have very good capabilities"
But Raul Anaya, head of the global consumer group for Latin America at Citi, dismisses the idea, saying that an acquisition of any of the three would be too difficult to swallow for a foreign rival.
"I think that the local banks are doing a very good job and they have very good capabilities," he says. "I think that achieving the large mergers will continue to be tough for the banking industry and so doing something with a combination of organic and inorganic is probably the way banks in the country will go."
Anaya adds that foreign banks in Brazil will grow through smaller purchases rather than blockbuster acquisitions of local players. "I dont think we will see the mega deals in Brazil," he says.
Other sources agree. "Brazil is a hard nut to crack for competitors. The top three banks are in strong hands and are trading at very high multiples, so if someone was looking at bidding for one of these banks they would be very much alone in that game," says Eduardo Cepeda, Mexico country officer for JPMorgan.
Although Citi is not splashing the cash in Brazil, neither is it slowing down its spending spree in Latin America. "Citi continues to pursue a strategy of diversifying its investments and deploying capital towards the faster-growing businesses and regions of the world both through organic growth and through targeted acquisitions ," says a Citi spokesman.
Joseph Scott, senior analyst for Citi at Fitch Ratings, says: "Continued expansion in key Latin American markets certainly fits in with Citis strategy of attaining a greater percentage of the earnings mix from international markets."
Citis official line has been backed by CEO Chuck Princes decision to promote Lewis Kaden to oversee potential investment opportunities for the bank. "I have asked Lew Kaden, vice-chairman, to spend more time working closely with me on major strategic opportunities and key issues," said Prince in an internal memo in September.
Citi has been busy in Latin America in recent months. At the end of July it confirmed the acquisition of a strategic stake in the holding company that controls Banco de Chile, the countrys second-biggest bank. Citi has grown in the region by acquiring Grupo Financiero Uno and Grupo Cuscatlán in central America, and Brazils Credicard brand, the countrys biggest credit card issuer.However, there is one big, non-local bank in Brazil that Citi is still thought to be sniffing around. "I wouldnt be at all surprised if Citi is seriously eyeing up ABN Amro Real if it comes up for sale," a US fund manager who focuses on Latin America told Euromoney in July.