HSBC sweats over getting green light for Brazil deal

martes 7 de junio de 2016 10:16 GYT

By Lawrence White and Guillermo Parra-Bernal

LONDON/SAO PAULO, June 7 (Reuters) - Brazil's competition watchdog is due to reveal on Wednesday whether HSBC can sell its Brazilian business to Banco Bradesco, a decision with big implications for the British bank's Chief Executive Stuart Gulliver and its shareholders.

Gulliver is relying on the $5.2 billion sale of HSBC Bank Brasil to boost HSBC's main capital ratio and ensure the bank can keep its status as the biggest dividend payer in European banking.

Some analysts fear the bank could find it harder to maintain that payout, if the sale of its Brazilian division is delayed.

"This deal is important because it adds 60 basis points to HSBC's capital strength which gets them to their target and means they can maintain the dividend in a weak year for earnings," Ian Gordon, analyst at Investec, said.

Brazil's central bank has already approved the deal, which is HSBC's biggest single asset sale since pledging to shrink its sprawling global business to cut costs and boost profits.

But the antitrust watchdog Cade has clashed with the central bank in the past over their roles in supervising M&A in banking. Both said they have jurisdiction over the financial sector based on their interpretation of the law.

Cade has been reviewing Bradesco's purchase since February and has so far failed to reach a consensus that competition will not be affected, a source familiar with the discussions told Reuters.

The watchdog's scrutiny of the deal is taking place while Brazil is in the grip of a political crisis and its economy has suffered its worst economic contraction since 1990.   Continuación...