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CADE authorizes the acquisition of Citibank retail business by Itaú-Unibanco


The approval was subject to the signature of a Merger Control Agreement
published: Aug 22, 2017 06:41 PM last modified: Aug 22, 2017 06:41 PM

Duringthe judgment session of 16 August, the Tribunal of the Administrative Council for Economic Defense – CADE authorized, with conditions, the acquisition of Citibank S/A retail business by Itaú-Unibanco S/A. The transaction, which was approved unanimously, was conditioned to the signature of a Merger Control Agreement - ACC in its acronym in Portuguese (Merger No. 08700.001642/2017-05).

During the judgment session, the Reporting Commissioner Mr. Paulo Burnier highlighted the low market participation of Citibank group in Brazil, dismissing competition concerns. In order to illustrate that, he mentioned the small number of Citibank’s agencies in the Brazilian territory.

However, the Reporting Commissioner also drew attention to the competition sensitiveness of the sector. This sensitiveness should not be neglected by the antitrust authority in its analysis of mergers and acquisitions and is the main reason for the adoption of remedies in this case.

According to Mr. Burnier, “The existence of high entry barriers and the low rate of rivalry in the sector justify the restrictions imposed. This measure aims to avoid a situation where consumer’s well-being could be harmed by an unconditional approval.”

Aiming at solving the competition issues identified, the parties negotiated with CADE’s General Superintendence regards the Merger Control Agreement - ACC, which was approved by the authority’s Tribunal.

The ACC follows broadly the same format of the agreement negotiated in the scope of HSBC-Bradesco merger case, which CADE approved with remedies in June, 2016 (Merger No. 08700.010790/2015-41).

The difference, in this case, is that the transaction between Itaú and Citibank does not result in Citibank Group’s exit of the Brazilian Market. The company will continue to perform its activities in the segments of corporative clients and institutional and private banking.


Through the ACC, Itaú commits to implement behavioral measures, which encompasses five main areas: Communication and Transparency; Training; Quality Indicators; Compliance; and Restriction to the Acquisition of Financial Institutions and Consortiums Management.

CADE’s Tribunal determined that Itaú is prohibited from acquiring financial institutions and management consortiums for a period of 30 months, starting from the publication of the decision in the Federal Official Gazette. However, this restriction does not apply to the merger regarding Itaú and XP Investimentos, which is currently under analysis at the authority.

The ACC also requires that Itaú should improve the availability of information and transparency to customers, especially concerning the credit and salary portability. This information should encompass financial education, responsible credit, and services utilization.

The agreement establishes measures aiming to improve the bank’s antitrust corporate policy, aiming to reduce the risk of its coordinated exercise of market power.

In addition, the bank committed itself to implement training courses qualifying its internal staff with the purpose of improving the client satisfaction in respect of retail banking. Finally, measures were established to increase the quality of customer service and to reduce the rate of customer complaints made to the Brazilian Central Bank.