The insurance arm of Brazilian bank Banco Itaú (NYSE: ITU) plans to enter the local extended services market in 2007 by offering those services to supermarket chain Pão de Açúcar, Brazilian press reported.
Banco Itaú and Pão de Açúcar controller, Brazil's largest retail group Companhia Brasileira de Distribuição (CBD), announced a consumer finance partnership earlier this year.
Itaú Seguros is slated take over AON Garantia's contract with Pão de Açúcar when it expires at the start of 2007.
The next two years give Itaú Seguros time to develop the business platform "this segment demands to be profitable for the shareholders and provide a good service for the consumer," local press quoted Itaú Seguros VP Marcelo Blay as saying.
Garantech, an alliance between Unibanco-AIG and Multibrás, currently dominates the extended services market with an 80% market share.
Banco Itaú is the second largest private sector bank in Brazil in terms of overall market share and Itaú Seguros is one of the country's five largest insurers.