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Itaú to buy Banco BMG's stake in JV; Banxico hikes benchmark rate

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Itaú to buy Banco BMG's stake in JV; Banxico hikes benchmark rate

* Itaú Unibanco Holding SAreached an agreementto purchase Banco BMG SA'sentire 40% stake in payroll credit joint venture Banco Itaú BMG Consignado SA for1.28 billion reais. The two companies will maintain their partnership by signinga new 10-year agreement for the supply, distribution and marketing of payroll loansfrom Itaú BMG through Banco BMG's distribution channels.

* Banco de Méxicoraised its benchmark interest rate by 50 basis points to 4.75%, citing increasedvolatility in global financial markets and concernsthat further depreciation of the peso could fuel inflation, which in turn couldhave a negative impact on economic activity. This is the central bank's third ratehike so far in 2016.

MEXICO ANDCENTRAL AMERICA

* launched a $500 million bondsale with a 5.75% coupon and a yield of 6%, Reuters reported. The bank willuse the proceeds for general corporate purposes.

* New regulationsfor Mexican banks following the 2008 financial crisis have prevented them from servingcertain niche markets, allowing nonbank financial intermediaries to gainground in some segments, El Economistareported, citing Alan Elizondo, a senior executive at Mexico's central bank.

* Mexico's has for the time being shelved a plan to relaunchits national savings bonds program as the company focuses on other priorities suchas the modernization of its technology platform, El Economista reported, citing Director General Alejandra del Moral.

* Fitch Ratingssaid that despite operating in a difficult economic environment, Mexican banks willcontinue to post stableresults mainly due to higher loan growth and rising interest rates, El Economista reported.

CARIBBEAN

* The U.S. National Hurricane Center said hurricane Matthew intensifiedinto a Category 2 hurricane and could further strengthen into a major hurricane,Reuters reported. Approximately 565 miles east-southeast of the Jamaican capitalof Kingston, Matthew posted maximum sustained winds of 100 miles per hour.

BRAZIL

* is set to lowertargets for its U.K. unit in the wake of the country's vote to leave the EU, Reutersreported. However, the impact of the U.K.'s weaker market environment is expectedto be offset by risingprofitability in Brazil, where Santander saw a 20% increase in profit quarter overquarter in the three months through June.

* Itaú UnibancoHolding SA said it received approvalfrom Brazil's central bank to proceed with a 12 billion reais capital increase aimedat bolstering the bank's balance sheet.

* Brazil's NationalMonetary Council decided to maintainthe TJLP interest rate, at which state-run development bank Banco Nacional de Desenvolvimento Econômico e Social pegsits loans, at 7.50% for the fourth quarter, Reuters reported.

* Brazil's prosecutor-generalcalled on Panama to quickly furnish banking informationthat was requested more than a year ago related to Brazil's corruption investigationinto state-run oil firm Petrobras, Reuters reported.

* The InternationalMonetary Fund outlined tough policy recommendationsfor Brazil in areas including social security as the country works to recover froma steep recession. "If key reforms are watered down or get stalled in Congress,the boost to confidence will be short lived, and the recession may continue, puttingfurther stress on income and balance sheets throughout the economy," the IMFsaid in a summary statement.

* The Braziliancentral government's primary budget deficitincreased to 20.3 billion reais in August from 18.8 billion reais in the previousmonth as the country's ongoing recession weighed on tax revenues, Bloomberg Newsreported.

* Brazil's nationwidebanking labor strike continued on Sept. 29, resulting in the closureof 13,246 branches, or 56% of the overall bank branches in the country, Valor Econômico reported. Labor unions willmeet on Oct. 3 to discuss their future plans, although a date for a fresh roundof talks with banking federation Fenaban has not been set yet.

* Mortgage loansfinanced through savings deposits in Brazil totaled 4 billion reais in August, 5.2%higher than in the previous month but down 31.5% compared to the same month a yearago, Diário Comércio Indústria & Serviçosreported,citing data from mortgage lenders association Abecip.

ANDEAN

* FitchRatings affirmed Peru'slong-term foreign and local currency issuer default ratings at BBB+ and A-, respectively,with a stable outlook on the long-term ratings. The rating agency said Peru's trackrecord of macro policy credibility, consistency and flexibility has delivered macroeconomicand financial stability, although the country does face several constraints, includinghigh commodity dependence.

* Peruvian bankingregulator SBS has proposed strengtheningthe corporate governance of local savings and loan cooperatives to better protectshareholders and clients, Gestión reported,citing SBS chief María del Socorro Heysen. Changes are needed in the rules for theseentities so directors and shareholders can make long-term plans, Heysen told Peru'sCongress.

* Fitch Ratingsupgraded its short-termcurrency issuer default ratings on Bancode la Nación, Banco Agropecuario,Corporación Financiera de DesarrolloSA and Fondo MIVIVIENDASA to F1 from F2. The move follows Fitch's affirmation of Peru's sovereignratings.

* has decided to distribute a cash dividendin the total amount of 100 million Venezuelan bolivars, Reuters reported.

* ColombianPresident Juan Manuel Santos has called on the country's central bank, , to considerreducingits benchmark interest rate, which currently stands at 7.75%, in order to supportthe economy's recovery, Reuters reported.

* Colombia'sfinancial regulator will work with state-run Banca de las Oportunidades and thecountry's insurance union to develop a tool to help resolve consumer complaintsin the insurance sector, La Repúblicareported.

SOUTHERNCONE

* The International Monetary Fund said Argentina's government has made progressin fixing fiscal imbalances, but more reforms will be necessary in order to achievesustainedgrowth. "Strengthening public expenditure management, further improvinggovernance, and increasing the efficiency of public spending would create spacefor a much needed reduction of the tax burden while continuing reducing the fiscalimbalances," Roberto Cardarelli, head of the IMF's mission to Argentina, saidin a statement.

* Argentina sold $300 million worth of dollar-denominated Treasury bonds andabout 61.57 billion Argentine pesos of debt denominated in the local currency, Reutersreported, citing the finance ministry.

* Argentina's government has made considerable progressin ensuring a high level of economic growth over the next two years, but it mustreduce its fiscal deficit in order to avoid a ratings downgrade in the medium term,La Nación reported, citing Gabriel Torres,a senior analyst at Moody's.

* Santiago's Chamber of Commerce has agreed to assume managerial responsibilityfor Chilean compensation fund La Araucana, which filed for judicial reorganizationearlier in 2016 as a result of insolvency, DiarioFinanciero reported.

* Jorge Ottavianelli, the head of Uruguay's private banking association ABPU,said a financial inclusion law passed in 2014 has not resulted in higher profitabilityfor the local banking sector, at least in the short term, El Observador reported. The association estimatesthat private banks have been losing out on $10 million in annual commissions onsalary accounts.

IN OTHERPARTS OF THE WORLD

* Asia-Pacific:ADB to lend Bangladesh US$8B;Fed issues consent order to China AgBank

* Middle East& Africa: New ratings for Iranianbanks; Kenyan rate cap boosts lending

* Europe:

* North America:Stumpf endures 2nd round of interrogation;Maxine Waters aims to break up Wells

Paula Mejiacontributed to this article.

The DailyDose has an editorial deadline of 8:00 a.m. São Paulo time, and scans news sourcespublished in English, Portuguese and Spanish. Some external links may require asubscription.