Journalist Sonia Racy, chief columnist of newspaper Estado de S. Paulo revealed today a potential M&A negotiation taking place between Santander and two of its competitors: Bradesco and Banco do Brasil (BB). Here is what her note says:

“Some members of BB have been whispering that Santander might be in talks to sell itself to Bradesco. But the market rumors are different: who really wants to acquire Santander is BB.”

Headed by the Spaniard Marcial Portela, Santander is not doing well in Brazil. Among many issues, it faced integration problems with Banco Real, it lost key executives, and, like all financial institutions in Spain, it was heavily impacted by the European crisis. For instance, Valor Economico wrote recently that Spain’s banks are “among the most despised in Europe, at a time of an urgent need to increase capital.” The article also states that Spanish institutions are literally “being abandoned by investors.”

For both BB and Bradesco the acquisition would be strategic, as it would allow either of them to surpass Itaú Unibanco and take the lead among Brazilian financial institutions.

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