Banks make for 2 of the top 5 domestic M&A deals in 1H09

Banking deals came out as two of the top five M&A moves in Brazil in the first half of 2009, according to a new report on M&A in the BRIC countries from intelligence and research service mergermarket. The largest banking deal in the country during the period - and the second-biggest across all sectors - was the US$2.5bn play by investment group BTG to buy UBS Pactual from UBS (NYSE: UBS) in April. BTG is led by André Esteves, the former head of the previously independent investment bank Pactual, who subsequently held several high-level positions at UBS following its sale to the Swiss financial group in May 2006. The fourth-largest deal was when federally controlled Banco do Brasil ( BB) agreed to buy a 50% stake in Banco Votorantim for 4.2bn reais (now US$2.1bn) in January. Bradesco's (NYSE: BBD) 1.4bn-real transaction in June to take on Banco ibi was the ninth-largest in the country, according to the report. INSURANCE, PUBLIC SECTOR BANKS "We were expecting some M&A before [in insurance], but the deals seem to be taking some time to go through," mergermarket's Latin America head Priscilla Murphy told BNamericas. Murphy said that regulator Susep's rising capital requirements will drive smaller, less capitalized firms to seek large international investors. On the banking side, Murphy said that BB and Caixa Econômica Federal ( CEF) will likely make more pushes for expansion, while Bradesco has gotten somewhat more cautious. There is also word that Itaú Unibanco (NYSE: ITUB) will look for a wealth management bank in Colombia, she said, noting that mergermarket had not been able to confirm the report with the bank. Itaú Unibanco has previously mentioned its taste for entering Mexico. In terms of financial advisors in Brazilian M&A, UBS led the rankings with deals worth US$9.21bn in the first half. Rothschild came in second with US$6.01bn and Bradesco took third with US$5.77bn, the mergermarket report said. Total M&A deals in Brazil came to US$21.4bn in the first half, down 43% from 1H08 in US dollar terms, but the Brazilian real lost value against the US dollar in the first half, with the US dollar rising 25% against the real in the 12 months to Thursday.