| SAO PAULO
SAO PAULO May 2 Brazilian state-run Caixa
Econômica Federal is considering becoming a partner in
investment bank Grupo BTG Pactual SA's corporate insurance
business, two sources with knowledge of the situation said on
Friday, as they seek to strengthen existing business ties.
Caixa, Brazil's largest mortgage lender, is studying how to
team up with BTG Pactual in the high risk and corporate
insurance business, although no terms have been decided, one of
the sources said.
BTG Pactual is negotiating the purchase of the
insurance unit of Banco PanAmericano SA, a consumer lender in
which both BTG and Caixa are partners, said the two sources, who
requested anonymity because the deal is in the works. BTG
Pactual could merge PanAmericano's insurer into its own
division, one of the sources noted.
The deals could help Caixa gain a foothold in corporate and
high risk insurance as it ventures into credit for
infrastructure under the instruction of the federal government,
its largest shareholder. BTG Pactual began its insurance
operations last year, focused on products such as performance
bonds for engineering and oil projects, and civil liability in
PanAmericano could use proceeds from the sale of its
insurer, which could fetch as much as 600 million reais ($270
million), return to profitability following its emergence from
bankruptcy in recent years.
BTG Pactual and Caixa are also finalizing the terms of a 1.5
billion real capital injection into PanAmericano, part of
efforts to help the lender return to profitability, the sources
said. Both the insurance deal and the PanAmericano
capitalization "go hand in hand" and could be announced
together, the first source added.
PanAmericano, which on Friday announced that it will change
its name to Banco Pan SA, is 63 percent owned by BTG Pactual,
with Caixa retaining a 37 percent stake.
The potential sale of the PanAmericano insurance unit to BTG
Pactual was reported by O Estado de S. Paulo newspaper earlier
($1 = 2.22 Brazilian reais)
(Reporting by Guillermo Parra-Bernal and Aluísio Alves; Editing
by Richard Chang)