Brazilian M&A: Consolidation to accelerate?
While concerns about loan growth, liquidity and profitability have taken centre stage in recent weeks, there has also been plenty of excitement in Brazilian banking about M&A.
Which institution will gain the top spot following Banco Itaú’s audacious R$26.5 billion takeover bid for Unibanco, announced at the beginning of November, and a series of acquisition announcements by Banco do Brasil?
Of the two, the Itaú-Unibanco deal has more profound significance. The resulting bank would be one of Latin America’s largest financial institutions but it has divided observers about its significance: does it highlight the strength or weakness of the Brazilian banking system?
At first glance, the move seemingly indicates the confidence that many observers have in the potential of Brazilian banking. "It’s certainly good in terms of strengthening the overall banking system," says Marco Maciel, chief economist at Banco Pine. However, there are plenty of observers that say the move indicates potential weaknesses. "The government was undoubtedly working behind the scenes to secure the Itaú deal," says one market observer.