Brazil's central bank has approved a joint venture between Banco do Brasil SA, the nation's largest bank by assets, and card payment processor Cielo SA, but the bank cannot claim accounting gains in its projected profits.
Banco do Brasil announced the planned joint venture in November of 2014, valuing the venture at 11.6 billion reais (U.S. $4.3 billion) to run its card business with Cielo. The bank estimated at the time that the deal would add around 3.2 billion reais to its bottom line.
However, in approving the deal, Brazil's central bank said there should be no accounting impact from the intangible assets involved in the operation, Banco do Brasil said in a press release. The central bank's ruling nullifies Banco do Brasil's estimated earnings boost, the bank said.
Last summer, payment processor First Data established itself as a competitor for Cielo and SA Redecard in Brazil, as those two companies control more than 90% of the Brazilian payments market.