Itau Unibanco to buy stake in Cencosud credit card business
SANTIAGO (Reuters) - Brazil's largest private-sector bank, Itau Unibanco Holding SA (ITUB4.SA), will buy a 51 percent stake in Chilean retailer Cencosud's CEN.SN credit card business in Chile and Argentina for $307 million, the companies said on Monday.
Itau will fund all credit card loans, worth around $1.3 billion, in both Southern cone countries once the deal is wrapped up in 12 to 18 months, according to the companies' joint statement.
Under the terms of the deal, which needs to be approved by regulators in Argentina, Brazil and Chile, Itau will buy shares in Cencosud's credit card unit.
"This association is part of Cencosud's long-term strategic plan, which aims to strengthen the financial services it offers its clients without needing to use its own resources," the statement read. Cencosud will use revenue from the deal to reduce its debt and finance growth, Chief Executive Officer Daniel Rodriguez told reporters during a press conference.
"This agreement allows Itau to speed up its growth plan, substantially strengthening its market position in two countries considered strategic to the holding," the statement added.
Chilean retailers have aggressively expanded throughout much of Latin America, which is riding a boom of consumer spending on the back of robust economic growth.
At home, however, regulation of retailers' credit card operations has tightened after a series of scandals.
The Supreme Court in April fined Cencosud an estimated $70 million for a unilateral hike of its supermarket unit's credit card maintenance fees in 2006.
(Reporting by Felipe Iturrieta; Writing by Alexandra Ulmer; Editing by Carol Bishopric)