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Tuesday, August 10, 2010

Brazil's state bank, partners push into Africa

Brazil's biggest state-run bank and two other partners announced an expansion in Africa on Monday in the latest sign of growing financial links between emerging markets.
Banco do Brasil, Latin America's largest bank by assets, said in a regulatory filing it will team with local private-sector giant Banco Bradesco and Portugal's Banco Espirito Santo (BES) to tap Africa's growing appetite for consumer loans, credit cards and other products.

Brazilian President Luiz Inacio Lula da Silva has made commercial ties with Africa a major priority of his administration, visiting at least 25 African countries, setting up agricultural offices and doubling the number of embassies there. Lula's finance minister stood alongside the CEOs from the three banks at a news conference in Sao Paulo on Monday.

"The African continent is the future," Finance Minister Guido Mantega said.

Lula has spoken of increasing Brazil's role as a financial center for the developing world, and links with the rest of the so-called BRIC nations -- India, China and Russia are the others -- have expanded quickly in recent years. So-called "south-south" business often bypasses traditional financial centers such as New York and London entirely.

The three banks said they will form a holding company to consolidate all BES holdings in Africa and plan future investments. They were still sorting out other details such as who will hold what percentage of the new entity, and analysts said the short-term impact on the banks' bottom lines will likely be minor.

The plan is to build on BES' existing network of branches and use the financial strength of the new partners to fund potential acquisitions. The new entity will do business not only in African countries where Portuguese is spoken such as Angola, Mozambique and Cape Verde, but others including South Africa, Algeria and Morocco, Mantega said.

"Like Latin America, Africa is undergoing a boom in economic development, given its mineral wealth, its wealth in oil and gas and in the cement industry," said Luiz Carlos Trabuco Cappi, chief executive for Bradesco, Brazil's No. 2 private-sector bank.

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