Banco do Brasil plans to buy two small U.S. banks-INTERVIEW

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Tuesday August 17, 2010 06:05:18 PM GMT

* Plans several acquisitions in the U.S., exec says

* May purchase minority stakes in some Latin banks

* International expansion to support Brazil companies

By Aluisio Alves

SAO PAULO, Aug 17 (Reuters) - Banco do Brasil, Latin America's largest bank by assets, plans to buy two small U.S. banks for about $100 million to diversify its business in its first major move in North America, a top executive at the state-run bank told Reuters.

The state-run bank expects to have about 400,000 clients in the United States in five years after the takeover of one lender in New York and another in Florida, Allan Toledo, vice president of international operations, said in an interview late on Monday.

The acquisitions would likely cost a fraction of the $480 million Banco do Brasil paid for control of Argentina's Banco Patagonia, he added. The bank is focusing its U.S. expansion on the U.S. East Coast, where 70 percent of the estimated 1.4 million Brazilian immigrants live.

"We are going to spend at most 20 percent of that," said late on Monday. "Acquisitions are a cheap vehicle to expand at this point."

Banco do Brasil is expanding overseas as competition mounts in areas such as retail and corporate banking and insurance in Brazil. The bank bought a controlling stake in Banco Patagonia in April and last week unveiled a venture with Banco Bradesco and Portugal's Banco Espirito Santo to expand in Africa.

Banco do Brasil raised $4.1 billion in a share offering in June, looking to bolster its capital base and help fund a foray in international markets.

The lender is also considering the purchase of minority stakes in some banks in Chile, Ecuador, Peru and Colombia -- where the presence of Brazilian companies has increased at a fast pace in recent years. Expansion in Venezuela and Mexico has been ruled out, Toledo said.

"We could lend money in local currencies and even administer payrolls" in those countries, he said. Controlling a lender in Argentina makes sense because more than 250 Brazilian companies run operations there, he noted.

The bank is considering opening a securities unit in Singapore, which could facilitate its access to funds. In China, one office will be transformed so it can lend more support to Brazilian companies domiciled there, he said.

Shares of the Brasilia-based bank slid 0.7 percent to 30.09 reais on Tuesday. (Writing by Elzio Barreto and Guillermo Parra-Bernal, editing by Gerald E. McCormick)

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