(Adds source, details on BTG Pactual plans throughout)
By Tatiana Bautzer and Guillermo Parra-Bernal
SAO PAULO, Nov 30 (Reuters) - Grupo BTG Pactual SA is negotiating the sale of around 4 billion reais ($1.03 billion) in loans to rivals Itaú Unibanco Holding SA and Banco Bradesco SA to bolster cash, sources said on Monday.
The banks expect to finalize the deal as early as this week, said three sources with direct knowledge of the situation.
The move would allow BTG Pactual to downsize its balance sheet following the arrest of André Esteves, the bank’s former chief executive and chairman, said the sources, who requested anonymity because negotiations are still underway.
Banks offload debt from their balance sheets to free up capital or raise cash during moments of financial headwinds. BTG Pactual has faced a jump in client money withdrawals since Nov. 25, when Esteves’ arrest fanned concern over the bank’s ability to retain clients and businesses.
Neither bank commented on the transaction.
Proceeds from the loan sale deal, coupled with those coming from the sale of a 12 percent stake in hospital chain Rede D‘Or São Luiz SA to Singapore’s GIC Pte Ltd, will help BTG Pactual raise cash needed to pay for redemptions and bolster liquidity, one source said.
Heavily dependent on short-term market funding and with about 55 percent of liabilities due for refinancing within 90 days, BTG Pactual is trying to assure clients that operations are normal. Still, fears about liquidity and available funding led Moody’s Investors Service and Fitch Ratings to put the bank’s rating on review for a downgrade.
$1 = 3.8665 Brazilian reais Additional reporting by Sarah McFarlane in London; Editing by Meredith Mazzilli and Tom Brown