NEW YORK & SAO PAULO--(BUSINESS WIRE)--Fitch Ratings considers Banco Santander Brasil's acquisition of the remainder of Get/Net as Neutral to the bank's ratings.
Banco Santander Brasil S.A. (SanBrasil - Long-Term Foreign Currency IDR rated 'BBB'; National Long-Term Rating 'AAA(bra)' by Fitch) announced on April 7th an agreement to, after several steps, acquire the remaining 50% portion that it does not already own of Brazilian credit card processor GetNet Tecnologia SA (GetNet) for about 1.1 billion reais (SanBrasil total equity of BRL 64 billion).
The merchant acquiring business, known locally as 'Adquirencia', mainly consists of the processing of credit and debit card payments for merchants, acquiring operations, and the processing of operations of receivables related to those acquiring operations. Last year SanBrasil had stated its goal of increasing shares of GetNet. Although, in the short term this acquisition is expected to have a neutral impact on the ratings, the bank's growth in this business bodes well for SanBrasil's income diversification in the medium term, as this is a profitable business with synergies with its retail and commercial banking franchises.
SanBrasil currently holds an approximately six percent market share of the merchant acquiring business in Brasil. Management expects to grow this business at a greater pace during the second half of 2014 following the completion of this acquisition. Fitch expects SanBrasil to be able to grow its market share as it continues to invest in this business segment even though it will face significant competition from other large, experienced domestic players. Several of these competitors also have significant ownership in credit card processing companies such as REDE and CIELO. Combined, these two companies already have a market share of nearly 90%. In addition, recent regulatory changes in the credit card industry are expected to dismantle various exclusivity arrangements of some major competitors which may enable SanBrasil to further increase its penetration with coveted high volume merchants; however, certain fees such as POS terminal rental fees may become pressured resulting in lower revenues for this business, affecting not only its competitors, but also SanBrasil.
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