Is Bankrupt Banco Santander Preparing to Sell Brazil Branch?
May 27, 2012 • 11:10PM

Brazil's {O Estado do Sao Paulo} reported midweek that Santander, the Eurozone's largest bank and the lead bank of the British Crown's Inter-Alpha Group, is considering selling just under half --probably 30-40%-- of its Brazilian unit, in order to raise capital to cover losses back in Spain.

That Santander would consider selling the goose that lays its golden eggs, points to just how desperate Santander is for immediate funds. Santander's Brazil operations provided some 30% of the mother bank's global profits in the past couple of years.

State-owned Banco do Brasil and the country's second-biggest private bank, Bradesco, were reported to be the possible buyers. Santander spokesmen in Madrid and Brazil denied the report; Bradesco's people refused to comment. Banco do Brasil called it a baseless rumor, but one Brazilian paper said it was President Dilma Rousseff who blocked the state's banking giant from buying a large stake in Santander Brasil. The Brazilian government has been trying to use competition from its two biggest public banks to force Santander (and other private banks) to lower the wildly-usurious interest rates which it charges its customers. Those interest rates, along with playing the Brazil carry trade, are what made Santander's Brazil unit so central to its international operations.