In a move that would bolster its global investment banking and asset management divisions, Chase Manhattan Corp. said Thursday it had agreed to buy most of the business operations of Banco Patrimonio de Investimento SA, a Brazilian investment bank.
The price was not disclosed. However, observers estimated that Chase would pay $90 million to $100 million for the Sao Paulo bank, or 1.5 times its $58 million of capital.
Patrimonio, with $316 million of assets and about $2 billion of institutional and private assets under management, specializes in asset management, debt and equity trading, fixed-income underwriting, and research.
The deal does not include the Brazilian company's commercial banking operations or its private equity business.
Though several U.S. banking companies, including Citigroup, Wachovia Corp., and BankBoston Corp. have recently acquired Latin American banks, Chase has largely stayed out of the fray save for its purchase last year of a minority stake in Banco General de Negocios, an Argentine investment bank.
With many Latin banks now trading at below book value in the wake of a downturn in emerging markets, analysts predicted other U.S. banks may soon follow Chase. They said J.P. Morgan & Co., BankAmerica Corp., BankBoston, and First Union Corp. may also want to take advantage of the rock-bottom Latin American prices.
"Foreign banks are going after Brazilian investment banks in order to build a position for future business," said Carlos Daniel Coradi, president of Engenheiros Financeiros & Consultores, a Sao Paulo consulting firm.
Banking sources in Sao Paulo said that another foreign institution is expected next week to buy Fonte Cindam, a Brazilian financial firm. The sources said the buyer is believed to be based in either the United States or Europe.
"Most banks have reached the conclusion that they will not be able to build from scratch overseas and the only way to build is to buy something," said Lawrence Cohn, a banking analyst at Ryan, Beck & Co.
Chase has focused on arranging loan syndications and debt issues for Latin America's top 500 companies, many of which are based in Brazil.
In an interview late last year, Brian D. O'Neill, a Chase managing director who heads Latin American operations, indicated that the bank was looking to buy corporate finance and asset management operations in Latin America that could be readily integrated into the company's global activities.
He added that, unlike the big Spanish banks and companies such as HSBC Holdings PLC, Chase would not offer local commercial and retail banking services.
This latest deal calls for Chase's Brazilian corporate banking unit, Banco Chase Manhattan SA, to absorb Patrimonio's corporate advisory, asset management, and capital markets activities.
Jair Ribeiro da Silva Neto, president of Patrimonio, will become chief operating officer of Banco Chase. All current partners and managing directors of Patrimonio will also move over to Chase's Brazilian unit.
"Chase has long talked about the need to become a global investment bank, and this clearly strengthens it in Brazil," Mr. Cohn said.
He added that the deal would also help Chase strengthen its position in Brazil's fast-growing market for asset management alongside BankBoston, which has carved out a major business in that sector.
"Asset management is a very lucrative business in Brazil, and BankBoston has made a lot of money doing that," Mr. Cohn said.
Chase executives were unavailable Thursday to comment on the deal. But William B. Harrison, vice chairman of the bank, said in a statement that the purchase should help Chase become "the leading investment bank in Brazil and a market leader in all major wholesale financial products."
He added that it would also "underscore Chase's long-term commitment to Brazil, to Latin America, and to emerging markets in general."