On May 5th, it was announced that Banco Bradesco SA, Brazilian bank based in St. Paulo, will start the acquisition of BAC Florida Bank paying $500 million. This will stand as the first international acquisition for them, but it has still to be approved by competent regulatory authorities of Brazil and US. It has been argued that the main purpose for this move was the aim of Bradesco to attract a higher number of high net-worth individuals which would enable it to become more competitive against its rivals on Brazilian market. Therefore, it’s not a coincidence that the majority of clients to whom BAC Florida provides its financial services are non-resident high net worth individuals.
BAC Florida was based in Coral Gables, Miami, Florida, and is controlled by Grupo Pellas (founded in Nicaragua 1877). The bank has over 10,000 clients to this date, in 49 US states. On 31st December 2018, the bank showed total assets of US$2,235 million, shareholders' equity of US$205.9 million and net income of US$29.4 million (Bloomberg). It covers a range of operations, including Private Banking and Wealth Management, Corporate and Institutional Banking, Real Estate Financing along with its online banking and brokerage services. Bradesco said that this deal will enable them to provide an even wider range of financial services to its clients in United States and hopefully increase the growth rate of new customers of the bank.
"Expanding our product and service offerings through BAC Florida is a way of being the preferred wealth management bank for our clients, who have increasingly demanded more diversification and greater access to global solutions," said Octavio de Lazari, Bradesco Chief Executive Officer.
Contrary to the public opinion, Lazari says that Bradesco is not aiming to expand its retail banking side outside of Brazil, but would rather prefer to concentrate on broadening its private banking business horizons which currently manages more than $50 Billion in assets. Numbers prove the point mentioned above, the size of acquisition is less then 1% of Bradesco’s market cap, however it would largely improve the standards of private banking business of the bank.
Bradesco is not the first institution on domestic market to have taken this kind of move in order to expand its private banking business. Its rival Itaú Unibanco Holding SA has acquired the private banking business of ABN Amro and now-defunct BankBoston in Latin America nearly 12 years ago. This strategy has proved to be successful for Itaú Unibanco as it has the biggest footprint in private banking in Latin America to this date.
The deal is newly announced but legal authorities are expected to act on it quickly. Only time will show if this acquisition will serve its purpose, making Bradesco successful in private banking industry.
Vladimer Chogoshvili
BAC Florida was based in Coral Gables, Miami, Florida, and is controlled by Grupo Pellas (founded in Nicaragua 1877). The bank has over 10,000 clients to this date, in 49 US states. On 31st December 2018, the bank showed total assets of US$2,235 million, shareholders' equity of US$205.9 million and net income of US$29.4 million (Bloomberg). It covers a range of operations, including Private Banking and Wealth Management, Corporate and Institutional Banking, Real Estate Financing along with its online banking and brokerage services. Bradesco said that this deal will enable them to provide an even wider range of financial services to its clients in United States and hopefully increase the growth rate of new customers of the bank.
"Expanding our product and service offerings through BAC Florida is a way of being the preferred wealth management bank for our clients, who have increasingly demanded more diversification and greater access to global solutions," said Octavio de Lazari, Bradesco Chief Executive Officer.
Contrary to the public opinion, Lazari says that Bradesco is not aiming to expand its retail banking side outside of Brazil, but would rather prefer to concentrate on broadening its private banking business horizons which currently manages more than $50 Billion in assets. Numbers prove the point mentioned above, the size of acquisition is less then 1% of Bradesco’s market cap, however it would largely improve the standards of private banking business of the bank.
Bradesco is not the first institution on domestic market to have taken this kind of move in order to expand its private banking business. Its rival Itaú Unibanco Holding SA has acquired the private banking business of ABN Amro and now-defunct BankBoston in Latin America nearly 12 years ago. This strategy has proved to be successful for Itaú Unibanco as it has the biggest footprint in private banking in Latin America to this date.
The deal is newly announced but legal authorities are expected to act on it quickly. Only time will show if this acquisition will serve its purpose, making Bradesco successful in private banking industry.
Vladimer Chogoshvili