Good morning, ladies and gentlemen, and thank you for waiting. We'd like to welcome everyone to Bradesco's BAC Florida Bank Share Purchase Agreement Conference Call. This call is being broadcasted simultaneously to the Internet in the website, bancodogbradescoir en. In that address, you can also find the presentation available for download. We inform that all participants will only be able to listen to the conference call during the company's presentation.
After the presentation, there will be a question and answer session when further instructions will be given. Before proceeding, let me mention The forward looking statements are based on the beliefs and assumptions of Banco Bradesco's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors who could also affect the future results of Banco Bradesco and could cause results to differ materially from those expressed in such forward looking statements. Now I'll turn the conference over to Mr.
Carlos Fiete, Market Relations Director.
Good morning, everyone. Welcome for our conference call for discussing the acquisition of BAC Florida Bank. We have with us today our CFO, Andre Cano and the Executive Director and IRO, Leandro Miranda. For starting the call. I turn the floor to Leandro.
Hello. Good morning, everybody. We are very happy to make this announcement today related to the acquisition of Bax Florida. We consider this acquisition pretty much strategic for us. It enhances our goal of strengthening our wealth management operation, Especially in the segments of high net worth individuals and private banking.
It also brings us very other assets such as being able to raise funds in the U. S. To provide mortgage credit personal loans to our clients. It has been for a while a very strong demand from our clients to have this kind of services in the U. S.
We believe that in this sense, we are going to have a much better condition to serve our clients through the operation in the U. S. Moving now to the details of the deal, pretty much make the position for $500,000,000 Which implies price to tangible book value of 2.5 times. The closing of the transaction is subject to the approval of both authorities, the United It's Brazilians. And this is something that we expect to happen from 6 to 8 months from now.
But of course, again, we are not able to precise any sort of date during the transactions of this matter. Bakkt has $2,200,000,000 in total assets And a book value of $206,000,000 It had a net income of $29,000,000 in 2018 and return on equity of 15.3%, but it's pretty much Good when you compare the U. S. Industry. Now we're going to turn a little bit to our strategy there.
In Slide 3, you can see that we provide an overview of Banc Florida. The bank is headquartered in Coral Gables. It has more than 25 years of banking experience in U. S. The main business lines are real estate and in mortgage financing, private banking and wealth management.
We also have achieved a corporate bank in a very interesting one of digital banking. It has its own broker dealer. That is also something that we want to connect to the ones that we have here in Brazil. And it's used for operations and private bank in high income individuals that I have before. It has a very solid capital base and its wealth management.
And in this sense, we want to keep the whole team there just running the operation the way They have done so far. We are very pleased with the performance that they have achieved and we do believe that It can be enhanced even more connected to our culture and the way we see the business. Jumping to Slide 4, We see that the real estate financing of Bakken is pretty much the leading provider Mortgage loans in Florida. And Brazilian loan retrans, They pretty much represent something around 20% of this portfolio. And then you have around 10% coming from North Americans and all the rest you have Latin America and China.
It's pretty much focused on The relevant market for Private Banking and Wealth Management. And related to Corporate and Institutional Banking, The bank is pretty much focused on cash management and investment services. And finally, Bank, as I have mentioned previously, has a digital bank that acts Nationwide, it comprises 4 9 states, and it's called MoneyBank. And we believe that this Moneybanc platform is something that is really going to be a plus for the Brazilian client since it has all the information and features that they look the most. And this is a product that may be expanded.
Our strategy there is to, 1st of all, keep Bakkt's current operation and then expanding the base with our clients and clients alike the way we have today. As you provide a wide range of financial services to U. S, we believe that our clients are going to benefit from that. In the presentation, we just would like to highlight one more our objectives here in the transaction that is to expand our client base in Brazil because we're going to increase the array of services that we are providing there. That has been a long request from our clients here.
Also, since from a Box client base and increase our share of wallet in the U. S. Market related to Brazilian clients. It also attracts a more cost effective funding cost for us to make our operations in U. S.
So our cost of funds to benefit from that related to international loans that we provide to our clients. Of course, we understand it can help us in terms of the loyalty increase and EPS on Bradesco's clients and, of course, to get the adequate financial return to the capital invested there. And we do like to get this opportunity to once more confirm our commitment to create Long term value to our shareholders, employees and society as a whole. And we are pretty much confident Confirmed that the financial industry, the strength, the strategy and wealth management with all the clients in the region. Thank you very much for your patience, and we remain available here for the Q and A.
Ladies and gentlemen, we will now initiate the questions and answer and come from Mr. Carlos Gomez of HSBC. Mr. Carlos, you may proceed.
Good morning. Thank you for taking my question. Perhaps the Good morning, Christian. I have the philosophy of the transaction. I mean, this seems to be away from your Brazilian business.
Yes, you're going to develop a tank in Florida. But should we see this as a first step to international to make it more international and to go to Central America? Or do you intend to use it more as a platform to and the Peruvian operation for your ownership in China. Thank you.
Carlos, thank you very much for your question. First of all, this is going to be a tool for our network I'm sorry, Wealth Management's vision to retain and to extend our base of clients. It has been A long time request from our clients to get access to U. S. Financing, especially mortgage In
the state of
Florida, they also used to ask for credit cards to have chat in our accounts there. So we believe it's going to be an important movement in terms of It's strengthening our wealth management in our Brazilian clients base. We also are going to benefit from the clients base that they have there, Brazilians, Yes and Central America. And we do not believe it as Mike's implying to A huge strategy for Latin America. We do not want to play retail in Latin America as a whole, even Latin America, more in U.
S. We just intend to provide more tools on a strategic base to get more access, much more cost effective funding and provide access to our clients to, in this sense, have a stronger wealth management platform.
Okay. Thank you. And if I have a follow-up, Are you going to maintain the brand or go to Caresco, please?
No, Realtek, the brand. They have been in the market for 45 years. They have very good reputation among their clients. And we have a very good coincidence that DAC Might also imply Bradesco, America or something like that, that our President has been mentioning in our internal conversations. So We like the name and the clients recognize it, and we shall keep it for the time being.
Thank you. And it's not an issue. Can you tell us if it was the result of the bilateral negotiation with the group or the completed
No, indeed, we did the other way around. We needed to expand our activities in U. S. In order to provide all the services and products that we wanted to our clients base. And we actively I did find 3 banks that could be good platforms for that.
And Banc Florida was for us the one that really provided the ideal platform because it was pretty much complete, well run and with a very good team. And so we actively search for them with our advisers, Bradesco DBI Advisors in this matter. We talked to the shareholders, to the controllers of the bank, and we engaged into discussions since They not only liked our financial offer, but especially Our culture, the way we tend to manage the banks because we also aimed at keeping all the staff there and the senior management. So it was a very smooth Operation for them as well because the concern of them since the very beginning. So it was, I would say, a perfect match.
Thank you very much. Our
next question to Mr. Yuri Fernandes, Fernandez of JPMorgan. Mr. Yuri, you may proceed.
Thank you, gentlemen. I have my few questions actually. The first one Regarding the bank in Florida, like is you plan to expand the operations in the U. S. I mean, open more branches in Florida, something like this.
This is going to be, as you said, more hard for high income individuals from other countries and provide these services to Brazil. And my second question is regarding the value you paid. In 3 small assets, I understand it's a strategic But when we look to provision acquisitions with the Florida, I recall BCI, when they had 2 acquisitions there, Total Bank And CMB. And I think they paid like 1.4, 1.5 and 1.7 for those assets. And what imply that you are paying, I would say premium to operated.
Can you also explain what would explain the This asset is better, like the profitability. What do you think can you justify this premium versus recent acquisitions in Florida? Thank you.
Thank you for your question, Yuri. First of all, we do not intend to expand our activities there in Florida regarding to retail or to commercial bank as a whole. This is much more a wealth management strategy in order to enhance our position and to provide all the products and services that our client base ask us to do so. So that's the first point. So it's not expected to extend more and more the activities that we have there to different kind of ones.
The second thing regarding to price, We have made a very deep research there and talked and analyzed Most of the transactions of this kind in U. S. And preceding transactions, they have price earnings of 19.6x. This one was 17.2x. So basically, it was a little bit ago the average price.
But we were prepared to pay much more because we believe that this is the only bank that has a perfect match with our age. They are very well run. We like the team. We do not need to make additions or to make corrections in the way they manage the business. The personnel there is enough to back the activities that we want.
So we believe it's a unique opportunity for us. It's strategic. It is below the average price, And we were expecting to pay even more because of the importance of this business to our Wealth Management platform.
Now super clear. Thank you and congratulations for the acquisition.
Thank you.
And to remove dial star 2. Our next question comes from Mr. Nicolas Hiva of Bank of America. Mr. Nicolas, you may proceed.
Yes. Thank you very much for taking my questions. Just one in terms of funding, so you're paying $5,000,000 for this and you also have a bond coming June September $50,000,000 Anything you can share in terms of funding for this acquisition.
Nicolas, I think one thing that doesn't The mix with the other, basically, I think the amount we are paying is relatively this morning. We can do without any problems. Regarding the maturity of the bonds, the any It depends on market conditions and the attractiveness of the rates. To be honest, basically raising money outside Brazil hasn't been, At this point, the most attractive options, we have been much more focused on funding ourselves in Brazil.
Thanks, Carlos.
Excuse me, ladies and gentlemen. Since there are no further questions, I would like to invite the speakers for the closing remarks.
Well, once more, thank you very much for making the time to listen and talk to us. We are very enthusiastic with this acquisition. We think it's strategic And it's going to enhance our 3rd arm, as our CEO has Said in several occasions that we have a very strong wholesale arm, a very strong retail arm, And now we are enhancing our wealth management platform. So it's pretty much aligned to what we have mentioned several times in the last month, and we remain positive in the way we are going through. Thank you once more.
Have a great week.
That does conclude the Banco Bradesco's conference call for today. Thank you very much for your participation. Have