JPMorgan looks to Brazil government for business

November 30, 2012

Reuters, 11/29/2012

JPMorgan Chase & Co (JPM.N) sees a strong government presence in Brazil as a source for new business leads, a senior banker said on Thursday, highlighting the growing clout of the nation’s public sector as an investment-banking client.

A decline in interest rates to record lows will create room for states and municipalities to access the debt capital markets in a way unheard of in the country, Aod Cunha, who heads the bank’s public sector corporate banking unit, told Reuters. Government presence in the economyaccounts for about 40 percent of Brazil’s gross domestic product.

Under President Dilma Rousseff, measures such as interest-rates, tax reductions and regulatory changes have gained the upper hand – a sign JPMorgan bankers say is proof that state presence will stay significant in the long run. Efforts to boost investment will increase demand for specialized financial advisers among government agencies, Cunha added.

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Tempting targets for Itaú in 2012

January 3, 2012

Rob Cox and Jeffrey Goldfarb – New York Times, 12/25/2011

Roberto Setúbal is chief executive of Itaú Unibanco, which is poised to go shopping. Paulo Fridman/Bloomberg News

Itaú Unibanco in Brazil bills itself as “the Global Latin American Bank.” Thing is, it’s not. Or at least, it’s not yet. That may change in the coming year. Itaú’s solid finances, robust market valuation, searing ambitions and a wealth of opportunities from the misfortunes of global rivals make it the bank to watch in 2012.

As many American and European lenders struggle to emerge from their funks, Itaú will increase earnings by at least 10 percent this year and next while return on equity will surpass 20 percent, JPMorgan Chase estimates. Though Brazil’s biggest bank may not be a household name on Wall Street, its attractions haven’t escaped investors. The group, led by Roberto Setúbal, is valued at around 2.2 times book value, or assets minus liabilities.

As a result, Itaú’s market value exceeds $80 billion, making it 50 percent bigger than Bank of America and bigger than Goldman Sachs and Morgan Stanley combined. That gives Itaú an attractive currency with which to scour the globe for acquisitions.

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