Brazilian banking giant Banco Itaú has decided to leave the country and has opened “preliminary negotiations” with local financial institution Banco Macro over a sale of its operations in Argentina.
The talks were confirmed in a statement issued simultaneously by Itaú Unibanco Holding S.A. to stock exchanges in São Paulo and Buenos Aires.
“Itaú Unibanco is in preliminary negotiations with Banco Macro S.A., based in Argentina, with the aim of transferring its operations in that country,” it read.
"Itaú Unibanco also informs that, so far, it has not signed a binding document in relation to this possible operation and will immediately inform the market of any relevant information about this fact.” it concluded.
Banco Itaú, one of the largest banking operations in Latin America, operates in Brazil, Chile, Colombia, Paraguay and Uruguay. The firm also has a smaller presence in financial capitals such as London, Luxembourg, Hong Kong, Tokyo and New York.
The Brazilian bank, however, has not achieved its objectives in Argentina, failing to challenge the larger domestic players. In rankings by assets, it ranks 18th nationwide with assets of 411 billion pesos (US$2.3 billion at the official exchange rate), according to Central Bank data.
Banco Macro S.A., chaired by businessman Jorge Brito, is one of the leading private banks in Argentina and is listed on both the Buenos Aires and New York stock exchanges. It ranks fifth, with 2.1 trillion pesos.
In a separate statement, the institution confirmed that talks were ongoing and that the company is “permanently analysing different business possibilities."
“To date no binding act has been concluded,” it added.
The talks are taking place against the backdrop of a severe economic crisis in Argentina. The economy is expected to contract this year, while annual inflation is running at more than 108 percent per annum.
Beyond rampant inflation and slowing growth, the key rate set by the Central Bank is negative in real terms, making it difficult for banks to offset and profit in the current environment, which includes a ban on transferring dividends abroad.