UPDATE 1-China Construction Bank buys Brazil's BicBanco for $725 mln

Thu Oct 31, 2013 5:41pm EDT

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(Adds details from filing and background about midsize bank segment)

SAO PAULO Oct 31 (Reuters) - Brazilian mid-sized lender Banco Industrial e Comercial SA said on Thursday it will sell 72 percent of its capital to China Construction Bank (CCB) for 1.62 billion reais ($725 million) which could lead to a delisting of the Brazilian bank.

Shares of BicBanco, as the bank is known, have risen 127 percent to 7.50 reais since early August. Soon after that, rumors circulated in the market that the principal shareholders of the Brazilian bank might sell a controlling stake.

In the leadup to August, BicBanco's bond and share prices had declined sharply on market concerns that its financial position was eroding due to bad debt.

BicBanco has a market value of 1.7 billion reais ($778 million).

If the deal is approved by regulators, the purchase would be the first of a Brazilian bank by one of China's big four state lenders. It would also be the biggest Chinese bank deal in Latin America.

The Sao Paulo-based bank, which specializes in corporate credit, is being advised by Citigroup Inc.

In July, Moody's Investors Service said BicBanco's profitability and asset quality have been under pressure following consecutive quarters of credit losses from non-performing loans. (Reporting by Reese Ewing; Editing by Gary Hill and Ken Wills)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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