November 13, 2019 / 9:54 PM / a month ago

Brazil's Bradesco to spin off digital bank Next by March 2020

SAO PAULO (Reuters) - Brazil’s second largest private sector lender Banco Bradesco SA (BBDC4.SA) will spin off its digital bank Next by March 2020, chief executive Octavio de Lazari told analysts on Wednesday.

Digital banks in Brazil, such as Banco Inter SA (BIDI11.SA), are rapidly gaining clients and being priced at higher valuations than traditional banks.

Lazari said that as a standalone bank Next will incur lower costs and capital ratios and become more competitive. To foster competition, the Brazilian central bank has set lower regulatory requirements for small banks.

Next is expected to reach 2 million clients by the end of this year, with an additional 3 million by December 2020, Lazari forecasted.

Lazari did not rule out searching for a partner for Next or listing its shares in an initial public offering. “If we decide to do an IPO, it would happen only in 2021,” he added.

Reporting by Carolina Mandl; Editing by Chizu Nomiyama and Rosalba O'Brien

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