Brazil’s Caixa Economica Mulls Strategic Partners for Insurance, Asset, Card Units

By Carolina Mandl | April 1, 2019

Brazil’s Caixa Economica Federal is mulling strategic partnerships for its credit card, asset management and insurance units before taking them public, Chief Financial Officer Andre Laloni said on Friday [March 29].

This strategy is part of Caixa’s plan to raise up to 100 billion reais from the sale of assets the unlisted state-owned lender owns or manages.

Caixa has already unveiled plans to raise 15 billion reais via initial public offerings of the three units and another one that manages Brazil’s state lottery system.

Laloni said the bank is considering partnering with a payment card transaction processor in a new business for Caixa. Brazil’s largest card acquirers include Cielo SA, Redecard SA, GetNet, PagSeguro Digital Ltd and StoneCo Ltd.

Some partners may have to pay to distribute products via Caixa’s branch network.

In August, Caixa and France’s CNP Assurances SA said they would form a joint venture to sell life insurance products in the bank’s more than 4,000 branches. CNP agreed to pay 4.65 billion reais for a 40 percent stake in the venture.

“Such partnerships are likely to increase the units’ valuation before an IPO,” Laloni said in an interview, adding that as many as two units could be listed as soon as December.

Other deals that may help Caixa raise funds include the sale of its stakes in listed companies such as Petroleo Brasileiro SA , securitization and real estate sales.

In February, a government fund managed by Caixa sold its 8.9 percent stake in reinsurer IRB Brasil Resseguros in a secondary share offering. It was the first divestiture led by Caixa since Chief Executive Pedro Guimaraes took the helm at the state bank in January.


Caixa posted a fourth-quarter net loss of 1.113 billion reais ($287 million) after major writedowns demanded by the Brazilian central bank, Guimaraes said at a press conference earlier on Friday.

A real estate writedown of 2.2 billion reais followed efforts by the state-owned bank to sell homes it ended up owning when borrowers could not repay mortgages. It also posted a loss of 1.1 billion reais from corporate loans to three clients.

Guimaraes said the central bank demanded writedowns to reduce the value of real estate repossessed by the bank.

(Reporting by Caroline Mandl; writing by Carolina Mandl and Gram Slattery; editing by Chizu Nomiyama, Jeffrey Benkoe, David Gregorio and Richard Chang)

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