Mon Jun 9, 2014 8:06am EDT

(Reuters) – Brazilian financial companies are likely to pursue acquisitions abroad in coming years to take advantage of a retrenchment by European and U.S. rivals that are propping up capital and disposing of non-core assets, analysts said.

Brazil’s largest non-government bank Itaú Unibanco Holding SA and investment-banking firm Grupo BTG Pactual SA have already signaled potential interest in markets outside Brazil. Analysts and industry leaders say rival Banco Bradesco SA, bourse operator BM&FBovespa SA and insurer Porto Seguro could seek to expand overseas too.

For banks, tapping revenue sources in markets outside their home turf could help offset slowing growth, rising inflation and payroll costs, and growing state intervention in Brazil that is weighing down markets. The economies and capital markets of countries like Chile, Colombia and Peru are expanding faster than Brazil’s, opening room for Brazilian financial firms to tap new business opportunities.


“We will see some more consolidation going forward,” said João Augusto Frota Salles, an economist at banking industry consultancy RiskBank.

Itaú, after the takeover of Chile’s CorpBanca SA, earns 15 percent of revenues from abroad. Chief Executive Officer Roberto Setubal said earlier this year that the bank is keen on acquisition opportunities in Mexico and Peru “to avoid depending only on Brazil.”

Flagging capital markets activity, especially share offerings, in Brazil is driving BTG Pactual to look for takeover targets outside Latin America.

The São Paulo-based lender bought 2 percent of Italy’s Banca Monte dei Paschi di Siena SpA and is currently in exclusive talks to buy Swiss asset management BSI.

“BTG Pactual will focus on opportunistic acquisitions,” said Eduardo Nishio, analyst at investment bank Brasil Plural.

Taking on a more timid approach, Bradesco has been growing capital markets activity by winning mandates to underwrite fixed-income deals in the United States. The bank’s asset management unit plans to boost assets under management abroad from $1 billion to $6 billion in coming years.

And BM&FBovespa lists growing abroad as “the next item on our agenda,” Chief Executive Edemir Pinto told Reuters in a recent interview. (Editing by Guillermo Parra-Bernal and Chizu Nomiyama)