Behind the acquisition of the participation of BB (Banco do Brasil) in the digital bank Digio announced last Friday (8), there is a greater appetite for Bradesco to invest to accelerate the pace of business growth, in a tough environment of competition with fintechs.
The bank reported having reached an agreement to purchase Banco do Brasil’s 49.99% stake in Digio for R$ 625 million. With the operation, Bradesco will hold 100% of the share capital of the digital bank, created by the two financial institutions in 2015.
The conclusion is still subject to approval by the BC (Central Bank) and Cade (Administrative Council for Economic Defense). In a statement to the market, Bradesco stated that the acquisition is part of the strategy of investing in digital companies, seeking to diversify its operations and its audience.
According to Marcelo Noronha, Bradesco’s vice president, with the completion of the acquisition, Digio will represent a new independent growth front within the conglomerate, which also has the bank’s own brand, and the initiative also in the digital field via bank Next.
“We couldn’t speed up the business any more because we had another shareholder, and the other shareholder sometimes has a different strategy from yours”, says Noronha. “It’s a matter of each one’s strategy, there’s no right or wrong, but our willingness to invest [no Digio] it was bigger than BB’s”, adds the executive.
“The impact on BB’s result is estimated, via equity accounting, of approximately R$ 175 million and there is no material effect on the capital”, informed Banco do Brasil. When contacted, Digio said only through its advisory that the issue is being conducted by shareholders.
Noronha says he will also sit down with the digital bank team, led by the company’s president, Giovane Neves, to hammer out the planned expansion plans ahead, as well as the investments needed to put them on their feet.
“The business is growing, but it can be accelerated”, says the vice-president of Bradesco, who points out “ambitious plans for growth” for 2022.
Digio has a credit portfolio of R$2.5 billion, with approximately 2 million cards. The digital bank offers services such as account opening, personal credit, free TED transactions and ATM withdrawals, among others.
In the first half of 2021, the digital bank recorded net income of R$36.7 million, reversing the loss of R$9.2 million in the same period last year. In March, the shareholders approved an increase of R$ 150 million in the capital stock, which added up to approximately R$ 450 million at the end of June.
“This capital contribution is intended to support and consolidate the increase in Banco Digio’s operations through the expansion of the portfolio of products for customers,” said the digital bank, in a report.
Bradesco’s vice president says that the bank’s plans for Digio include an increase in the customer base via an expansion in the mix of products and services. “The idea is to start offering investments and also real estate credit, in lines that are of interest to customers”, says Noronha.
“We are at a very important moment for Digio. Our shareholding structure will change and Bradesco will hold 100% of the capital. We follow independently, keeping our DNA and our culture”, wrote Giovane Neves, president of Digio, in a post published on LinkedIn on Saturday (9).
“We believe this is an important step for our growth and with new investments we will be able to take even higher flights, being able to count on the know-how and solidity of the Bradesco group”, said the president of Digio in the publication.
According to Noronha, there is no intention of merging Digio’s operations with the Next digital bank, keeping each operation completely segregated from one another.
While Next was already born with a whole structure of products and services from a bank behind it, but totally in the digital field, in the case of Digio, says Noronha, the path taken was a little different, even more similar to that of some fintechs .
“Digio was born more like Nubank, starting to offer a credit card [em 2016], and not long ago [em 2020] which started to offer an account”, says the executive.
He sees the acquisition as a “pro-competition initiative” in a context of growing competition for customers between traditional financial institutions and fintechs.
“Bradesco, along with other competitors such as Itaú and BB, is called incumbent, but the bank does not stop growing, just look at the last balance sheet”, says Noronha.
In the second quarter of 2021, the bank recorded net income of R$6.3 billion, a result that represented an increase of 63.2% compared to the same period last year.
Amid increased competition in the sector, last month, banks, through Febraban (Brazilian Federation of Banks), came to make scathing criticisms of fintechs and their business models.
“The true ‘truth’ is that the big fintechs really like to pay only ‘half down’ and they are in no way different from banks. As a matter of fact, they are not just banks to pay less taxes, generate fewer jobs, have few regulatory and labor obligations”, attacked Febraban.
“The more competition the better. I think there’s a market for everyone, and it lets the customer make their choice”, says Noronha.
The executive also mentions a recent agreement signed by Digio with Uber to offer lines of credit with more advantageous conditions to the application’s drivers, which he sees as an important growth lever for the digital bank, in an increasingly challenging macroeconomic environment. forward.
Earlier this month, Bradesco worsened expectations for some of the main Brazilian economic variables, seeing more interest and inflation, a weaker exchange rate and slower activity in 2022 and also the risk of energy rationing as the main negative vector to be monitored.