Patagonia expects Uruguay unit to begin operating as commercial bank in 2012

- Wednesday, May 11, 2011

Patagonia expects Uruguay unit to begin operating as commercial bank in 2012

Argentina's Banco Patagonia has approved capitalizing its Uruguayan subsidiary by US$7mn with the aim of beginning operations as a commercial bank in 2012, Ruben Iparraguirre, Patagonia's CFO, told BNamericas.

Earlier this week, the bank requested authorization to turn its Punta del Este-based private banking unit - locally known as IFE - into a fully fledged bank, with the aim of taking advantage of trade flows among Argentina, Brazil and Uruguay, he said.

The capitalization will lift Banco Patagonia Uruguay's equity base to US$18mn to comply with regulatory requirements, Iparraguirre said. The deal is subject to approval by Argentine and Uruguayan regulators.

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Banco Patagonia is 51% owned by Brazil's federally controlled Banco do Brasil (BB). On April 7, BB requested approval from Argentine national securities commission CNV to carry out the mandatory tender offer for an additional 38.5% stake in the bank at US$1.314 per share.

The authorization is still being processed, Iparraguirre said. The tender offer period will last for five weeks following CNV's authorization.

BB paid US$480mn - or US$1.31 per share - to Patagonia's former owners, the Stuart Milne brothers, for the 51% stake in April 2010.

FIRST QUARTER PERFORMANCE

Banco Patagonia's net income for 1Q11 was up 22.5% quarter-on-quarter to 121mn pesos, equal to a 22.1% ROE, thanks to higher fee income and loan revenues.

Lending to the private sector increased 77% as of end-March compared with the same time in 2010, to 7.66bn pesos, according to the bank's latest earnings release.

Banco Patagonia is one of Argentina's top five banks, with 15.5bn pesos in assets and 11.1bn pesos in deposits as of March 31. The bank serves some 789,000 customers through 77 branches nationwide.

The bank also owns car loan company GPAT Compañía Financiera, which it bought last year from Detroit-based GMAC.

To read the bank's full earnings release in English, go to this link