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Brazil to sell portion of Banco do Brasil stake; Chile's FORUM ends Nissan deal

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Brazil to sell portion of Banco do Brasil stake; Chile's FORUM ends Nissan deal

S&P Global Market Intelligence presents the week's latest news and trends in Latin American banking.

Buy and sell

* The Brazilian government approved the sale of a portion of its stake in Banco do Brasil SA, although it will continue to hold control of the bank. The government, which owns a 52.16% stake in the bank, issued a decree authorizing the sale of 20,785,200 common shares. Banco do Brasil later said the government transferred the shares to Banco Nacional de Desenvolvimento Econômico e Social.

* Banco Santander Chile's shareholders approved the purchase of a 51% stake in Santander Consumer Chile SA for about 62.14 billion pesos. Santander Chile will acquire a 49% stake from Skberge SA for 59.06 billion pesos and a 2% stake from Banco Santander SA for 3.07 billion pesos.

* Grupo Vierci will buy a 25.68% stake in Banco GNB Paraguay SA for $150 million. The bank said the deal would strengthen its operations in Paraguay.

* Banco do Estado de Sergipe SA said the state government of Sergipe in northeastern Brazil, which controls the bank, is interested in selling part of its stake in the lender in a public share offering.

* Brazil's Banco BMG SA is considering hiring local and international investment banks to coordinate a potential initial public offering of preferred shares. The bank withdrew from a planned IPO earlier in 2019.

Strategizing

* Chile's FORUM Servicios Financieros SA will end its commercial partnership with Japanese carmaker Nissan in December. The two sides were unable to reach an agreement on renewing their deal, which will expire Dec. 22.

* XP Investimentos Corretora de Câmbio Títulos e Valores Mobiliários SA is set to enter the medium-sized company lending segment through a new division named XP Empresas. The Brazilian brokerage company looks will create a platform to match companies seeking financing with investment managers that want to add credit in their portfolios.

* Banco Bradesco SA announced a new voluntary employee severance program aimed at streamlining the bank's structure, improving productivity and maximizing value for shareholders.

Rating agency notes

* The steep decline of dollar deposits at Argentine banks is credit negative for those institutions, but liquidity buffers provide ample room to withstand the drain, according to Moody's.

* Moody's revised its outlook on Mexico's banking system to negative from stable, noting that lower economic growth prospects will weaken the government's ability to support banks.

Credit trends

* Brazil's financial system credit stock dipped in July to 3.290 trillion reais, down 0.2% on a monthly basis, due to weaker corporate financing, according to data from Banco Central do Brasil. The credit stock represents 46.9% of Brazil's GDP.

* Coface Chile SA CEO Louis Des Cars said an increasing number of Chilean companies are seeking credit insurance to shield their business from record high late-payment rates. Late payments reached a record-high 98.8% in June this year, 20.9 percentage points higher than last year.

The bottom line

* In Chile, second-quarter net income of Banco del Estado de Chile rose 84.6%, while Scotiabank Chile posted a 110.6% surge in first semester profits.

* Elsewhere, Banco Nacional de Desenvolvimento Econômico e Social's net income for the first semester increased 190% second quarter profits for Banco de Bogotá SA climbed 33.7% and 17.7% for Scotiabank Perú SAA.

In other news

* Bradesco and Itaú Unibanco Holding SA are the private banks with the most exposure to Odebrecht SA, according to a new court document listing the construction and engineering conglomerate's creditors. Odebrecht owes Bradesco about 8.38 billion reais and Itaú 7.71 billion reais in the form of unsecured loans.

* Banco BTG Pactual SA's shares dropped sharply for a second trading day on Aug. 26 following a report claiming that the Brazilian bank had a department dedicated to facilitating money laundering.

Featured this week on S&P Global Market Intelligence

* Markets react adversely to Macri's debt restructuring process: Financial markets reacted negatively on Aug. 29 to the decision by the Argentine government to redefine payment schedules on short-term debt, with stock markets and bonds showing losses of between 5% and 10% on the day.

* Argentine politics and economy test the IMF, again: The future of Argentina's financial lifeline from the International Monetary Fund is in flux as President Mauricio Macri's government seeks to extend its repayment schedule and his likely successor looks to change much more.

* Peru central bank chief: Rate cut helpful but cannot solve trade worries: A rate cut from Peru's central bank "helps a little bit" but cannot clear up the uncertainties businesses face amid persistent trade disputes, Banco Central de Reserva del Perú Governor Julio Velarde told S&P Global Market Intelligence.

* Colombian banking majors see aggregate Q2 profit surge 36.1%: The aggregate second-quarter profitability for three of the largest listed banks in Colombia improved 36.1% from a year ago as a surge in operating income more than offset higher expenses.

* Hires and Fires: A weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.

* Ratings Roundup: A summary of various ratings actions on Latin American financial institutions and economies.