SAO PAULO: Brazil's largest lender, Itau Unibanco Holding SA, said on Monday it is waiting for approval from the Federal Reserve to spin off its 41% stake in Brazilian broker XP Inc, expected in late January.

The bank said it will create a new company to hold the XP stake once it receives the approval.

Itausa SA, the holding company that controls Itau, said it has reached an agreement with XP regarding the divestiture.

A new holding company, XPart, will hold the current Itau stake in XP. The digital broker will propose conditions to incorporate the holding company XPart and both parties expect the transaction to go through in four months, according to a separate filing by Itausa.

Once the incorporation is complete, Itau's controlling shareholders will not be allowed to sell XP shares through October 2021. After this deadline expires, shareholders will be allowed to sell the stakes in six yearly block trades.

Itau shareholders will lose veto rights but will keep the right to appoint two board members at XP as long as they keep at least 5% of the broker.