(Recasts to add details, share performance throughout)
SAO PAULO, Nov 17 (Reuters) - State-controlled Banco do Brasil SA, Brazil's biggest bank by assets, and card payment processor Cielo SA are in talks over ways to expand the bank's credit card payment processing operations.
In separate securities filings distributed on Monday, the companies said talks on the matter have not yet been concluded. Banco do Brasil owns a 28.6 percent stake in Cielo, which in turn is Brazil's No. 1 card payment processor.
Talks between Cielo and Banco do Brasil's BB Elo Cartões Participações SA come as payment processors in Brazil brace for the end of card brand exclusivities this year.
In recent weeks, Elo, American Express and HiperCard card brands agreed to full acceptance by Cielo and smaller rivals Itaú Unibanco Holding SA's Rede and Banco Santander Brasil SA's GetNet.
A partnership with Cielo could help Banco do Brasil catch up on Itaú and Santander Brasil, whose units Rede and GetNet have expanded and gained market share from Cielo rapidly over the past year by taking advantage of the lenders' distribution networks.
Banks are relying on growth in fee income-related activities such as cards to offset lackluster demand for credit in Latin America's largest economy.
Shares of Banco do Brasil gained 3.1 percent to 25.24 reais, while Cielo rose 0.1 percent to 39.15 reais. (Reporting by Asher Levine and Guillermo Parra-Bernal; Editing by Jason Neely and W Simon)