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Bradesco's purchase of RCB Investimentos a credit positive, Moody's says

Banco Bradesco SA's planned acquisition of a 65% stake in distressed asset recovery firm RCB Investimentos SA is credit positive for the bank, Moody's said.

With the acquisition, Bradesco will have more expertise in recovering delinquent loans, which will reduce its debt collection costs, and allow it to quicken its recovery process, Moody's said. Brazil's recession contributed to a rise in the bank's loan write-offs, hitting 22.6 billion reais in 2016 and 26.2 billion reais in 2017, which are above the 12 billion reais average between 2010 and 2015, the rating agency added.

Bradesco's move is in line with similar purchases by peers, including Itaú Unibanco Holding SA's acquisition of Recovery do Brasil Consultoria SA and Banco Santander (Brasil) SA's purchase of Ipanema Investimentos.

Despite currently seeing low demand, Moody's expects distressed assets to attract investors seeking for higher yields.