Bci to buy Banco Conosur for US$99.9mn

Chile's Banco Conosur has signed a letter of intent with compatriot Banco de Credito e Inversiones (Bci) pointing to the 100% sale of Conosur to Bci for 62.5bn pesos (US$99.9mn), according to a statement to the country's securities regulator, the SVS. The deal took the market and other banks by surprise because there had been no previous rumors from insiders close to the negotiation, research analyst Ivan Rojas at local financial group CB Capitales told BNamericas. The transaction is one of the largest deals in the Chilean capital market this year, said Gianni Casanova at Santiago-based investment banking firm IB Partners, which advised Bci on the deal. The agreement will incorporate the sale of Banco Conosur's total shareholding, social rights, insurance brokerage and external collection agencies. The contract is due to be signed on January 15 next year although final approval for the initiative awaits the green light from Conosur shareholders and final authorization from the local banking regulator Sbif. "This acquisition will allow Bci to become one of the leading players in Chile within the credit segment, an area of strategic importance for Bci but where historically it has not had a significant stake," the bank said in a press release. The two banks have shown similar profitability this year but Conosur has a higher risk index because its business is more concentrated on consumer lending to middle-and low income individuals, Rojas said, adding Bci's expansion strategy is positive because it is set to run Conosur as a separate consumer loan division, reflecting similar operations adopted by Chile's largest banks Santander Santiago (NYSE: SAN) and Banco de Chile (NYSE: BHC). Banco Conosur belongs to Chilean economic group Del Rio that transformed Chile's only remaining finance company Financiera Conosur into a consumer bank in January 2003. Del Rio made the decision to convert it into a bank in order to be able to offer its many middle class clients a wider range of financial products. Bci is one of the few banks in Chile that still remains in family hands and the Yarur family has on several occasions ruled out any possibility of selling out or entering into a merger of equals with an international player.