Bradesco wins auction for Berj with US$633mn bid

Brazil's second largest bank, Bradesco (NYSE: BBD), won an auction for Rio de Janeiro's state-owned bank Berj with a bid of 1.03bn reais (US$633mn), the state government said in a press release. The government had sought to sell Berj for several years, and the last auction attempt in May 2010 failed due to a lack of bidders. The government had set a minimum price of 513mn reais for the auction, which also saw bids from federally controlled Banco do Brasil ( BB), Santander Brasil (NYSE: BSBR) and Itaú Unibanco (NYSE: UTB). Government officials called the auction a "victory" for the state due to interest from the country's largest banks and the fact that the winning bid was almost double the minimum price. In total, Bradesco will pay the Rio state government 1.8bn reais for the bank and the right to handle the payroll and pension payments of the state's public servants for three years. That contract starts in January next year and will add close to 430,000 clients to Bradesco. Berj is the result of a 1997 privatization, in which Banco Itaú - now part of Itaú Unibanco - incorporated one part of state bank Banerj, while the state government held onto the remaining assets, which came to be known as Berj.