Brazil’s Itaú Unibanco Holding is planning to divest its high-risk corporate insurance business, as part of its strategy to cut down on non-core business and use the proceedings to boost banking operations.


Itaú has updated BM&FBOVESPA S.A. Securities, Commodities and Futures Exchange that the report regarding its intention to sell its major risk insurance operation was true.

The company, however, clarified that the sale process hasn´t started yet and is expected to begin within the next few days.

Furthermore, Itaú said that the sale process will be a competitive one and the results of negotiations will be announced to the market immediately upon conclusion.

Itaú’s major risk insurance unit specializes in offering coverage for giant corporate projects in high-risk segments such as oil and gas and infrastructure.

The unit has revenue of about $723m annually and clients include state-oil company Petróleo Brasileiro SA, reported Reuters.

On 22 January, local financial newspaper Valor Econômico reported that the sale will help the Brazilian retail bank to avoid pumping more capital allocations under new Basel III rules for the insurance unit.

The disposal of the corporate insurance unit is expected to provide BRL1bn ($424m) to Itaú. It is believed that the company will retain its retail and personal insurance business, as they provide more stable revenues and higher returns compared to the high-risk insurance segment, according to the newspaper.

Image: Itaú bank in Avaré, Brazil. Photo courtesy of José Reynaldo da Fonseca.