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Cade counselor asks central bank to reject Itaú-XP Investimentos deal

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Cade counselor asks central bank to reject Itaú-XP Investimentos deal

A board member of Brazilian competition watchdog Cade has requested that the central bank reject the approval of Itaú Unibanco Holding SA's purchase of a 49.9% stake in brokerage firm XP Investimentos SA, Valor Econômico reported.

Speaking in a Senate session, Cade counselor Cristiane Alkmin Schmidt said the country cannot delay the process of unbanking, a development catalyzed by the presence of financial technology companies. "Any act of concentration that puts this process at risk must be looked at closely and disapproved," Alkmin Schmidt said, noting that more caution is needed in the analysis of the deal.

Alkmin Schmidt added that Itaú is buying XP Investimentos to gain back customers that the latter has attracted because of the investment platform's technology. The Cade counselor also sees a problem in the way Itaú initially presented itself only as a minority stakeholder, given that the operation could culminate in the bank holding a majority stake over the years.

Cade passed the deal, with restrictions, earlier this year. Alkmin Schmidt voted to block it. The agreement is valid until Dec. 31, 2022, after which Cade will again review Itaú's possible purchase of a controlling stake in XP Investimentos.

Banco Central do Brasil, meanwhile, has until July 18 to decide on the deal. The central bank authorization is the last hurdle for the deal's final approval.