April 4, 2014 / 9:35 PM / 5 years ago

CorpBanca shareholder Consorcio backs Itau deal: paper

SANTIAGO (Reuters) - A shareholder in Chilean bank CorpBanca COB.SN backed the company’s agreed merger with Brazil’s Itau Unibanco (ITUB4.SA) and questioned the rationale of another shareholder who sued to block the deal, a local newspaper reported on Friday,

People walk in front of a CorpBanca branch office in downtown Santiago January 29, 2014. REUTERS/Ivan Alvarado

“Our view as a minority shareholder is that the Itau-CorpBanca merger is better than CorpBanca alone,” said Patricio Parodi, the managing director of life insurance company Consorcio, in an interview with Diario Financiero on Friday.

The merger, agreed in January, would create a venture called Itau CorpBanca with a market value of $8 billion and give Itau an important foothold in Chile and Colombia.

U.S. investment firm Cartica Management, which has about 3.2 percent of CorpBanca, has filed a lawsuit alleging that the deal undervalues CorpBanca and gives special benefits to its controlling shareholder Alvaro Saieh.

But Parodi, whose company owns about 1 percent of CorpBanca according to Reuters statistics, said he doubted Itau had overpaid because “that would have hurt Itau much more than me, because it has many more shares. So I’m guessing that Itau negotiated that part well.”

In backing the deal, he said it would produce synergies and reduce the cost of bank financing for CorpBanca by around 70 basis points.

Cartica’s move, a rare instance of investor activism in the region, could upset a banking merger that would be Latin America’s largest since 2008.

Parodi said that would be bad for the shareholders.

“I don’t really understand the (Cartica) strategy. Does it want to stop the merger? I think stopping the merger and bringing us back the old CorpBanca is worse,” he said.

CorpBanca could not immediately be reached for comment.

Reporting by Rosalba O'Brien and Felipe Iturrieta; Editing by David Gregorio

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