Itaú Unibanco: the merger and beyond

Insper Instituto de Ensino e Pesquisa

Autores/Pesquisadores: Claudio Haddad, Sérgio Lazzarini e Luiz Fernando  Turatti

Área: Administração, Organizações e Estratégia (AE)


Código: AE-E0024/AE-E0024-TN


Resulting from a successful merger between two large family owned Brazilian banks, Itaú (controlled by the Setubal and Villela families) and Unibanco (controlled by the Moreira Salles family), Itaú Unibanco was, in late November 2011, among the top ten global banks in terms of market capitalization.

The case describes the previous situation of both Itau and Unibanco and then develops the integration process. The merger, announced three years earlier, strengthened their position and scale and was a must to deal with the increasing threat of foreign banks in the concentrated local market. It involved highly complex decisions related to cultural traits, brand architecture, system´s integration, shared governance, management board composition, among others topics.

An extensive debate took place to identify overlaps and complementarities and to combine the best of two worlds, as presented: the operational efficiency of Itaú was blended with Unibanco´s well-known customer orientation and people management initiatives. Furthermore, although Itaú was around twice the size of Unibanco in total assets, control was shared “fifty-fifty” between the two families.  While Pedro Moreira Salles became President of the Board of Directors of Itaú Unibanco, Roberto Setubal was appointed as its CEO.

After reviewing the consolidation process and considering it fully implemented, the case then moves towards the discussion of the future strategic direction of the bank. Itaú Unibanco was mostly positioned in the local market—around 92% of its revenues came from Brazil in 2010— but its potential international expansion was a source of intense debate.

Balancing the pros and cons, Pedro and Roberto must choose alternative courses of action aiming at responding to future challenges, opportunities and rampant competition.  The case ends by returning to the core questions from the introductory paragraph: Should the bank reinforce its position in Brazil or become a more relevant global player?  Should the bank pursue more acquisitions in the domestic market or abroad?  Where were the major opportunities for growth?


Teaching Objectives

The case can be potentially used in the following disciplines: Strategic Management, Corporate Strategy, Global Strategy, Corporate Governance, and the like. It applies primarily to MBA, graduate and undergraduate programs.

The objective of this case is to teach students the conditions, impacts and implications involved in M&A´s, the alternatives for companies to decide for and how to tackle international operations, as well as solving governance issues in newly configured internal environments.

Therefore, the case intends to develop students’ capacity to work with decisions and key concepts such as:

Global Strategy:   Designing international scenarios. Comparing different alternatives and related risks. Deciding the timing and conditions for a go/no-go international move.

Corporate governance: Establishing a balance of power and control among shareholders. Respecting shareholders representativeness and its implications. Acknowledging family ownership and control as key elements in large groups. Structuring Boards of Directors and Management teams.

M&A processes: Understanding the main issues faced in closing a merger between two large public companies, family controlled and in integrating their operations. Debating the myriad of impacts and decisions involved in complex environments:  from internal aspects as values, culture, positioning, people, IT, etc to its external manifestations like branding, operation, products & services, reputation.  Identifying frequent conditions that lead companies towards an M&A deal.


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