Brazilian media reported over the weekend that a minimum of five banks have expressed interest in purchasing a stake in Brazilian mid-size lender Panamericano. The media reports come in the wake of Panamericano’s cash challenges; emerging just days after the lender received an emergency cash boost to plug what the firm termed “accounting inconsistencies.” Panamericano has been fighting to stay afloat, with the financial bailout rescuing it from an impending collapse.

According to O Estado de S. Paulo newspaper, the five banks are keen on taking up a share held by Panamericano shareholder Grupo Silvio Santos. Last week, the Panamericano shareholder reported it was forced to borrow around 2.5 billion reals from Brazil’s deposit guarantee fund. O Estado de S. Paulo cited familiar sources as having revealed the information, but did not mention the names of the five particular banks interested in the mid-sized lender.

Grupo Silvio Santos will need to sell its stake in the bank to repay the loan from the guarantee fund, Estado reported. Currently, Grupo Silvio Santos controls around 49 per cent of PanAmericano's capital. The Brazilian central bank recently revealed that it had found indications of accounting inconsistencies that were used to inflate the value of Panamericano’s assets.

However, the Central Bank said the lender’s situation was not an indication of wider problems in the country’s financial system. Caixa Economica, Brazilian state run mortgage lender controls around 37 per cent of PanAmericano. Caixa Economica is the biggest mortgage lender in Brazil and it said it is not planning to sell its share.

Silvio Santos, owner of the Grupo Silvio Santos, a Brazilian media mogul and controller of Banco Panamericano SA is under investigation for alleged fraud. Silvio Santos sought bailout funds after he discovered his own credit card business owed the bank 400 million reais, around $232 million, revealed sources.

Grupo Silvio Santos said yesterday that it hired PricewaterhouseCoopers LLP to investigate Panamericano’s accounting irregularities, according to an e-mail from the group’s press office. Panamericano said in a regulatory filing yesterday it was suspending publication of its third-quarter results.

Grupo Silvio Santos put up assets as collateral for the 2.5 billion reais of loans it took out from the insurance fund, which is financed by banks that operate in Brazil, Panamericano said. Antonio Carlos Bueno, a director at the fund, said the assets are worth 2.7 billion reais, and that Silvio Santos participated in every meeting over the past month to design the rescue.

14 Nov 2010.