Banco Central do Brasil has given approval for the capital of Banco XCMG Brasil SA to be 100% foreign-owned, according to a press release from the monetary authority.
It marked the first such authorization by the regulator, which was recently given the authority to decide on the participation of foreign investors in banks. Previously, the country's president decided such matters.
The bank will be based in Minas Gerais state, with an initial capital of 60 million Brazilian reais, according to a report from Valor Econômico.
Banco XCMG will be established by China-based XCMG Construction Machinery Co. Ltd., which specializes in heavy equipment. The new bank will seek authorization to open investment, financing, credit and leasing portfolios, the report said.
The participation of foreign capital in Brazil's financial entities aims to boost external financing sources and further international integration, according to the central bank website.
As of Oct. 11, US$1 was equivalent to 4.09 Brazilian reais.