Banco Bradesco, Brazil's second-biggest private sector bank, pulled out of talks to buy HSBC Holdings Plc's consumer finance unit Losango on concern about potential charges related to labour disputes, a local newspaper reported on Friday. Both banks failed to resolve price disagreements, which helped sink the deal, O Estado de S. Paulo said, without saying how it got the information.
Bradesco bid 600 million reais ($321.7 million) for Losango, below HSBC's asking price of 800 million reais, Estado said. Bradesco pulled out of the deal after failing to secure HSBC's pledge to back Losango's labour-related liabilities, the newspaper said. Bradesco worried that Losango's employees may seek to have their job rights reclassified from those of sales clerks to those of bankers, boosting costs, Estado noted.
Reuters reported earlier this month that Bradesco was eyeing Losango as part of a strategy to expand more aggressively in retail banking in Latin America's largest economy. Losango's business model, however, is losing appeal in Brazil as borrowers are scaling down the use of pre-dated checks to pay for loan instalments. Calls to HSBC and Bradesco spokespeople in Sao Paulo seeking comment were not immediately answered.
According to the Estado report, Bradesco's pullout and tepid interest from Itau Unibanco Holding, Banco do Brasil and Banco Santander Brasil left Losango with no likely suitors.