By Guillermo Parra-Bernal and Rosalba O'Brien
SAO PAULO/SANTIAGO Jan 29 Brazilian bank Itaú
Unibanco Holding SA said it would acquire control of
leading Chilean bank CorpBanca SA, a deal worth an
estimated $3.7 billion that would help it expand beyond its
stagnant home turf into more dynamic markets.
The agreement, announced Wednesday, would not only give Itaú
an important foothold in retail banking in Chile but also
provide a way to grow in Colombia, South America's
fastest-growing economy last year.
The agreement calls for Itaú to pump $652 million into its
Chilean unit and then combine it with CorpBanca. The new entity,
which will be named Itaú CorpBanca, will be 50.5 percent-owned
by the São Paulo-based lender and also will take over the
Colombian units of both banks.
Itaú CorpBanca will have a market value of $8 billion, $44
billion in assets, a $33 billion loan book, about 10,000
employees and 390 branches.
"This is a stepping stone towards business opportunities in
Chile, Colombia, Peru, Central America," Ricardo Marino, Itaú's
head of Latin America businesses, said on a conference call.
For years Chief Executive Officer Roberto Setubal tried to
buy regional banks but backed off due to high valuations. Itaú,
Latin America's largest bank by market value, began operations
in Chile with the purchase of Fleet Boston Corp's local unit in
2006 and bought HSBC Holdings Plc's operations in 2011.
Itaú is contending with slowing economic growth and rising
household debt in Brazil, where it trails state-run lender Banco
do Brasil SA.
Trying to mitigate the impact of Brazil's challenges,
Setubal is reducing loan disbursements in some segments, ramping
up Itaú's presence in fee-earning businesses and looking at
acquisition opportunities elsewhere in Latin America.
CorpBanca said on a conference call that it did not foresee
any regulatory issues and expected approval by the end of 2014.
Itaú "becomes a player in two relevant Latin American
banking markets ... without straining capital or doing a
dilutive and expensive transaction," said JPMorgan Securities
analyst Saúl Martínez.
Given the assets and other indicators, this is set to be the
biggest transaction in Chile's financial industry and the
largest Latin American banking merger since the combination that
created Itaú Unibanco in 2008, according to Thomson Reuters
Shares of Itaú shed 1.9 percent to 29.53 reais. CorpBanca
plunged 13.5 percent to 6.080 Chilean pesos, reflecting
disappointment among investors that terms were too favorable to
Itaú and there was no buyout offering to its minority
shareholders, traders said.
TRUMPING BBVA, SCOTIABANK
Santiago-based CorpBanca is controlled by Alvaro
Saieh, a Chilean billionaire of Palestinian ancestry. Through
his Corp Group empire, he controls retail unit SMU, which owns
supermarket chain Unimarc. He also owns Chilean daily newspaper
Apart from Itaú, Spain's Banco Bilbao Vizcaya Argentaria SA
and Canada's Bank of Nova Scotia were also
interested in the Chilean bank, sources told Reuters in
December. BBVA, as the Spanish bank is known, came close, but
its proposal was not as attractive as Itaú's, a person with
direct knowledge of the deal told Reuters on Wednesday.
Besides the capital injection into Itaú's Chile unit, Itaú
will buy a 33.58 percent stake in CorpBanca through a
shareholder agreement with majority shareholder Corp Group. Such
a stake could be worth about $2.2 billion at CorpBanca's Tuesday
closing price, according to Thomson Reuters' calculations.
Marino, a member of one of the families that control Itaú,
declined to give the overall value of the deal, but factoring in
other parts of the acquisition suggests it could reach about
The combination allows Itaú to access Colombia's red-hot
retail banking market, which is dominated by a small number of
local companies. Itaú CorpBanca will own about 75 percent of
CorpBanca's units in Colombia - Banco Corpbanca Colombia SA and
Helm Bank Corp.
The new bank will buy out minority shareholders in CorpBanca
Colombia for $892 million and then absorb Itaú's Colombian
wholesale banking unit, Itaú BBA Colombia, at book value.
In August, SMU disclosed accounting errors in a review of
first-quarter earnings, raising its liabilities and leading it
to breach debt covenants. Fears of contagion pushed CorpBanca
shares to an all-time low at the time, although they have since
In November, Saieh injected $300 million into SMU and began
talks with Itaú to pursue a merger, an outright sale, or
creation of a structure allowing him to remain a relevant
shareholder in CorpBanca, sources told Reuters in December.
Alongside with the transaction, Itaú extended Saieh's Corp
Group a $950 million loan backed by CorpBanca shares, Marino
Boris Buvinic, currently CEO of Itaú's Chilean unit, will
head Itaú CorpBanca, and Jorge Andrés Saieh - Alvaro Saieh's son
- will become its chairman.