Panamericano all over again?

Banco do Brasil, LatAm’s biggest bank by assets, reported fourth-quarter profit that beat analysts’ estimates after cutting some expenses and gaining market share. Adjusted net income fell to R$3.03 billion (US$1.77 billion) from R$3.7 billion a year earlier. Loans grew 20 percent, faster than the industry average. But, according to Bloomberg, rising income from lending helped offset a loss in the Banco Votorantim (BV) unit, which mainly handles auto loans. The unit had a loss of R$656 million in the fourth quarter, compared with net income of R$272 million in the same period of 2010. Votorantim’s average delinquency rate, defined as a delay in payment of at least 90 days, rose to 5.8% in December, up from 4.3% in September and 1.6% a year earlier.

Million-dollar question: Did Banco do Brasil pay too much for Banco Votorantim?

Back in 2009, Banco do Brasil has bought 49.99% stake in Banco Votorantim for about US$2.35 billion (total valuation of about US$4.7B). The Brazilian public bank payed about US$1.67 billion in cash to the contr0lling group, and the remaining US$671 million were used to bolster Banco Votorantim’s capital.

So… perhaps it payed too much, considering profits fell 18% due to BV’s loan losses. Caixa Economica is not alone!

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