20 de noviembre de 2014 / 13:37 / en 3 años

Cielo's new joint venture to seek deals with other banks - CEO

BRASILIA, Nov 20 (Reuters) - The newly created joint venture between Banco do Brasil and card payment processor Cielo SA plans to expand by reaching deals with other banks and card issuers, Cielo’s chief executive said on Thursday.

The joint venture, announced on Wednesday after nearly a year of talks, is worth 11.6 billion reais, according to a securities filing. It will manage Banco do Brasil’s Ourocard debit and credit card payments.

“We will actively seek deals with other banks, other issuers, other potential partners to diversify the revenue sources of this new company,” Cielo CEO Romulo de Mello Dias said in a conference call with journalists.

The name of the new company and its chief executive are yet to be decided, Dias said. The joint venture, which had a pro-forma net income of 578 million reais ($225 million) in the 12 months through September, needs approval by the central bank and Brazil’s antitrust watchdog Cade.

State-controlled Banco do Brasil is Brazil’s biggest bank by assets and Cielo is the country’s No. 1 card payment processor.

There are no plans for a stock offering at the moment, but that could be considered in the future, Dias added.

The transaction will increase Cielo’s net-debt-to EBITDA ratio to 1.6, from 0.5 percent previously. After the deal is approved, Cielo’s board will vote to reduce mandatory dividend payment to 30 percent from the current 50 percent of earnings.

“That does not mean it will be lower forever. But we have to deal with the new debt the company is taking,” Dias said.

Brazil’s stock market is closed on Thursday due to a local holiday in Sao Paulo. Cielo shares last traded at 43.20 reais, and Banco do Brasil shares last traded at 27.54 reais.

The deal comes as payment processors in Brazil brace for the end of card brand exclusivity this year.

$1 = 2.5715 Brazilian reais Reporting by Silvio Cascione and Aluisio Alves; Editing by Chizu Nomiyama

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