Summit News

Itau Unibanco sees merger helping 2011

SAO PAULO (Reuters) - Earnings at Itau Unibanco ITUB4.SAITUB.N, Brazil's largest private sector bank, will likely be bolstered in 2011 by savings from the merger that created the bank, Chief Executive Roberto Setubal said on Wednesday.

The bank's stock has lagged far behind those of rivals including Banco Bradesco BBDC4.SABBD.N and Banco do Brasil BBAS3.SA this year, in part because of concerns over increased spending in 2010 to integrate branches and technology from Itau and Unibanco.

“Our shares are performing well. They haven’t performed extremely well because we aren’t showing the results from the integration,” Setubal said at the Reuters Brazil Investment Summit in Sao Paulo. “We believe that the results are going to appear more clearly next year.”

Itau Unibanco shares have gained 8.8 percent so far in 2010, less than half the 16.8 percent jump in smaller rival Bradesco or the 17.4 percent increase in state-run Banco do Brasil.

The Sao Paulo-based bank, formed when Itau took over smaller rival Unibanco in 2008, also lost market share to rivals as executives focused on ironing out details of the merger. But Setubal sees that changing next year.

“We spent energy within the bank to make this deal work out and next year I am going to spend this energy to win clients, win market share,” he said. “Our costs are evolving better than the competition. For next year, we think that will be more visible.”

Itau Unibanco is on the lookout for possible takeovers in Latin America, but no good options are in sight, he added.

The bank, which has business in Argentina, Uruguay and Paraguay, could venture into Mexico, Peru or Colombia and is interested in expanding its current business in Chile, Setubal said.

“Any investment bank that is looking to sell anything in Latin America, they will offer it to us because we are interested in buying,” Setubal said. “There are people wanting to sell things that we don’t want to buy, for a price that is wrong also, so no way. You have to be patient.”

Itau Unibanco has lured billions of dollars from investors in South Korea, Japan and other countries through partnerships with Daiwa Securities Group Inc 8601.T, KDB Asset Management and Daewoo Securities.

The bank could soon win mandates from sovereign wealth funds to manage their investments in Brazil, the latest sign of increased appetite from overseas investors for the country’s assets, Setubal added.

“We have Brazil-focused funds, Latin America funds that we manage for foreign banks and investors. We are close to winning some mandates from sovereign wealth funds that want to invest in Brazil,” he said.

Additional reporting by Guillermo Parra-Bernal, Todd Benson and Alberto Alerigi Jr., editing by Gerald E. McCormick