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UPDATE 2-Brazil's BTG Pactual considers spinoff of EFG stake

(Adds details on strategy for stake in EFG International)

SAO PAULO, May 9 (Reuters) - Latin America’s largest investment bank Banco BTG Pactual SA may spinoff its 29 percent stake in the Swiss private bank EFG International , the chief financial officer told analysts on Thursday.

BTG’s stake is worth around $600 million and spinning it off would be similar to what BTG did with Engelhart Commodities Trading Partners Group in 2016, CFO João Dantas said, although no decision has been taken yet.

BTG’s main partners now hold the stake in the company directly, although the bank still has a small stake in it.

The Swiss private bank currently drags profitability and makes it more difficult for investors to understand BTG’s business, Dantas added.

The bank’s profitability standalone reached 18.7 percent in the first quarter, while EFG’s return on equity came in at only 4.4 percent.

“BTG and EFG are two completely different businesses,” said the CFO. “While BTG is a fast-growing business, EFG is more stable.”

Latin America’s largest investment bank Banco BTG Pactual SA posted a 9.2 percent rise in first-quarter recurring profit on Thursday helped by fees in investment banking and asset management.

Recurring net income, which excludes one-time items, rose to 721 million from 660 million reais ($168.05 million) a year earlier.


Dantas said the bank is considering an expansion in Latin America of its digital investment platform, BTG Pactual Digital, one of the bank’s main bets to boost revenues.

The bank is preparing to launch a similar platform in Chile, where BTG already has a website that lures small investors, known as Mercado en Linea.

Profit was also helped by fees in asset and wealth management, which rose 30.1 percent to 298 million reais, as the bank continued to draw more money from clients. Net new money reached 7.3 billion reais, the bank said.

In a recent note to clients, analysts at Morgan Stanley said investors are underestimating the value that the platform may bring to the bank.

They said that BTG Pactual Digital may be valued at between 10.5 billion reais and 19.5 billion reais - or between 30 percent and 55 percent of BTG’s market capitalization - if it reaches 150 billion reais under management.

BTG declined to disclose the platform’s assets under custody.

$1 = 3.9273 reais Reporting by Carolina Mandl; editing by Jason Neely and Lisa Shumaker