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On Monday, UBS AG (UBS - Analyst Report) – the Zurich-based bank – announced the completion of the acquisition of Link Investimentos – a Brazilian brokerage firm. Financial terms of the deal were not disclosed.

UBS AG stands to benefit from its foray into Brazil by providing more diverse products and services to international as well as local customers. Further, Brazil’s reputation as the leading market in Latin America will serve as an added incentive.

Moreover, managers at Link Investimentos look forward to the deal and expect UBS AG's wide range of global products and client-focused advice and services to benefit their clients.


Previously, in Nov 2012, after a wait of roughly two years, UBS AG received the Brazilian government’s approval to operate in the country. The license allowed the Swiss bank to trade stocks, bonds, currencies, commodities or other financial instruments, with its own money in Brazil. Further, UBS AG can make real-denominated loans, raise funds in the Brazilian market as well as underwrite stock and bonds in the local market.

Along with the banking license, UBS AG gained consent from the Brazilian regulators to buy Link Investimentos, which has been in the pipeline since Apr 2010. Earlier in 2009, UBS AG sold its Pactual bank division to Andre Esteves – the former head of operations at Pactual bank – for a sum of $2.5 billion.

Our Viewpoint

Majority of global banks are currently struggling with the gloomy macro-economic factors and Eurozone crisis. As a matter of fact, UBS AG’s investment banking business has been faltering with a sharp decline in its revenue. Moreover, the stressed operating environment and stricter capital norms have added fuel to fire.

UBS currently retains a Zacks Rank #2 (Buy). However, we believe that opportunistic acquisitions as well as prudent business model changes can lead to an improvement in efficiency and add to its competitive edge.

Other foreign banks in the same sector with Zacks Rank #1 (Strong Buy) include Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Snapshot Report), Shinhan Financial Group Company Limited (SHG) and BBVA Banco Franc (BFR - Snapshot Report).

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