As part of plans to expand its retail banking services internationally, Banco Bradesco, a Brazil-based private-sector bank, has signed a memorandum of understanding with Cofra Holding AG, to buy its subsidiary, IBI Mexico.

Bradesco will pay cash for all shares in IBI Mexico, which administers the consumer finance arm of clothing retailer C&A in Mexico, offering credit card and consumer finance services. In the process, it will acquire a credit portfolio of $99m and over 1m credit card accounts.

The transaction is an extension of an agreement between Bradesco and Swiss-based Cofra Holding signed last year, when Bradesco purchased IBI’s business in Brazil for $766.7m in stock.

Marcelo Noronha, head of credit card business at Bradesco, said: “We grabbed the opportunity to extend our existing relationship with C&A outside Brazil. We identified it as a very well run asset. The deal offers Bradesco the opportunity to expand into a market with great potential for growth in consumer credit, just like Brazil.

“If we consider the size of the market, obviously Mexico is an extremely important market. Mexico and Brazil are the two main economies in Latin America. Obviously there is enormous potential in that market, the consumer finance market.”

According to Link Investimentos, a Brazil-based independent brokerage, the acquisition represents an important step in the internationalization of Brazilian banks.

Reportedly, most of the major Brazilian banks are looking for expanding outside the country as acquisition possibilities have become rare due to the recent credit crisis. Itau Unibanco Holding, rival of Bradesco, is also scouting for international opportunities. It already has retail banking operations in Argentina, Chile, Uruguay and the US.

The deal is subject to due diligence and regulatory approval but Bradesco expects that final contracts will be signed by March 30.