UPDATE 2-EFG in merger talks with BTG Pactual's BSI, sources say
(Adds BTG Pactual, EFG confirmation, share performance)
By Tatiana Bautzer and Joshua Franklin
SAO PAULO/ZURICH Feb 19 (Reuters) - Grupo BTG Pactual SA is in talks to combine its Swiss-based private-banking unit with EFG International AG in a transaction that could be announced as early as next week, two sources with knowledge of the plan said on Friday.
The structure under discussion would leave São Paulo-based BTG Pactual with a stake of 20 percent to 30 percent in the combined entity, said the first source, who asked for anonymity since the discussion remains private. Whether EFG incorporates BSI, or vice versa, will be decided based on the most efficient tax structure, the source said.
Both BTG Pactual and EFG confirmed they are in exclusive talks over BSI, adding that no decision had been made yet. Shares in EFG were up 2.4 percent at 6.74 Swiss francs in Zurich at 1146 GMT.
The deal would help BTG Pactual move on with a plan to sell assets, raise cash and restore investor confidence in the wake of the arrest of founder André Esteves last November. Esteves was the architect of BTG Pactual's purchase of BSI last year, which he said would help the independent investment bank grow beyond Latin America.
BTG Pactual could partly receive payment for BSI in cash, the sources said. Zurich-based EFG and BTG Pactual agreed not to adjust the value of the deal should BSI have to pay a fine related to a scandal at a troubled Malaysian government fund, 1Malaysia Development Bhd, the source said. Continuación...