* Itaú trumped Bradesco, Santander in race for unit
* Citigroup expects to book $300 mln after-tax gain
* Comes as Itaú seeks to growth in consumer finance
SAO PAULO, May 14 Itaú Unibanco Holding SA
will take over Citigroup Inc's Brazilian
consumer finance units for 2.77 billion reais ($1.37 billion),
as the nation's biggest bank by market value expands more
rapidly in the local credit card market.
Under the terms of the deal, Itaú will take over Banco
Citicard SA and Citifinancial Promotora Ltda, as well as the
Credicard card brand that serves more than 4.8 million clients,
according to a securities filing on Tuesday. The unit has about
8 billion reais in assets, the filing said.
With the purchase, Credicard returns to Itaú, which was
Citigroup's partner in the company until 2006. The transaction
is subject to regulatory approval.
The transaction also gives Itaú an edge in the card market
in Brazil, where more than 40 million people have in the past
decade joined the ranks of the middle class and increasingly
using financial products. With the Credicard purchase, Itaú's
credit card base will rise to 37.7 million from 32.8 million at
the end of last month, the bank said.
On the other hand, the sale allows Citigroup to make
progress toward a longstanding plan to exit non-core businesses
in some key markets.
"We are strengthening our leadership in the consumer finance
and credit card markets in which we have an ample portfolio of
products and services and specialized platforms," Itaú Chief
Executive Officer Roberto Egydio Setubal was quoted as saying in
The bank is focusing on fee-related activities to try to
stem a decline in revenue from loans in the face of an abrupt
decline in interest rates, two years of sub-par economic growth
and rising leverage among some consumers. Last year, Itaú took
control of the 49 percent it did not own of redecard SA,
Brazil's No. 2 card payment processor, for about 10.5 billion
reais, seeking to boost revenue from the segment.
Itaú trumped Banco Santander Brasil SA and Banco
Bradesco SA, which sources recently told Reuters
were in the race for Credicard. Under the terms of the
transaction, Itaú will be allowed to book earnings from
Credicard operations from Jan. 1, the filing said.
The sale of Credicard is expected to generate an after-tax
gain for Citigroup of about $300 million, the New York-based
bank said in a statement. Citigroup's retail banking business in
Brazil will not be affected by the sale of Credicard, the same
Itaú shares rose 1.5 percent to 34.52 reais on Tuesday,
extending gains so far this year to 5.2 percent.