UPDATE 1-Brazil's Grupo BTG Pactual in talks with Italy's Generali over BSI sale

Wed May 14, 2014 5:40pm EDT

(Adds quote, context on potential sale)

By Guillermo Parra-Bernal and Lisa Jucca

SAO PAULO May 14 (Reuters) - Grupo BTG Pactual SA, Latin America's largest independent investment bank, is in exclusive talks to buy wealth management firm BSI from Italian insurer Generali SpA, according to a statement Wednesday by Generali.

The announcement came at the end of a Generali board meeting prior to the Italian company's release of first-quarter earnings early Thursday.

Sao Paulo-based BTG Pactual, controlled by billionaire financier Andre Esteves, is seeking the purchase of a wealth management company to add more fee-related activities to the fast-growing banking empire he has built since 2009.

Asset and wealth management revenue have become a bigger portion of the bank's revenue over the past two years, partly because of the units' strong performance in the wake of weak capital markets activity in Brazil.

"Generali has granted exclusivity to Banco BTG Pactual ... to conduct negotiations relating to the potential acquisition of the entire share capital of BSI," the Generali statement said.

Generali, Europe's No. 3 insurer, is pushing ahead with a plan to sell 4 billion euros ($5.48 billion) of assets to bolster its capital base. BSI, a wealth manager, has been on the block for a number of years but had failed to draw sufficiently attractive bids.

BSI, a wealth manager headquartered in Switzerland's Italian-speaking Ticino region, could be worth around 2 billion euros, some analysts have said, making it a key piece of Generali's asset disposal strategy.

Generali, Italy's biggest insurer by premiums, wrote down 217 million euros from BSI's value in the final quarter of the year in a bid to pave the way for a sale.

Under the leadership of Chief Executive Mario Grego, Generali is shedding non-core assets to squarely focus on its insurance business. The company has already sold assets worth more than 2 billion euros, including sales in the United States and Mexico.

($1 = 0.7294 euros) (Editing by Eric Walsh)