Banrisul plans US$187mn capital hike, sees room for further growth in home state

Thursday, April 14, 2011

Brazilian Rio Grande do Sul state bank Banrisul is planning to raise its capital stock by 300mn reais (US$187mn) to 3.2bn reais, and the bank's management sees room for further growth in its home state despite an already dominant market share.

Banrisul has called for an extraordinary shareholders' meeting on April 29 to approve the capital increase. The bank plans to undertake the increase entirely through retained earnings, Banrisul said in a statement.

Banrisul is one of the 10 largest banks in Brazil in terms of assets. It commands roughly 25% of the retail banking market in Rio Grande do Sul, which is one of the country's wealthiest states.

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Barclays Capital recently met with Banrisul management, who said they believe the bank still has room to grow in its home state, especially in the agribusiness and mortgage loan segments, where its market share is currently low.

The management team also said there is space for more bank penetration in the state's smaller cities, where credit unions are the main competition, according to a Barclays Capital research note.

Banrisul has a free float of 42.8%, and Barclays Capital has a 2-Equal Weight recommendation on the bank's stock.