Banco Cruzeiro do Sul SA, the Brazilian lender downgraded by Moody’s Investors Service last month because of funding difficulties, agreed to acquire control of Banco Prosper SA for 55 million reais ($30 million).

Cruzeiro do Sul, based in Sao Paulo, will acquire 88.7 percent of Prosper’s capital, according to a regulatory filing yesterday. The deal needs approval from Brazil’s central bank.

Brazilian small- and mid-size banks such as Cruzeiro do Sul and Prosper are facing a funding squeeze because of Europe’s debt crisis and the bailout of Banco Panamericano SA in November 2010. Moody’s cut Cruzeiro do Sul’s credit rating to Ba3, three levels below investment grade, on Nov. 18, citing “increasing competition in the segment” and the lender’s reliance on “higher-cost guaranteed deposits and on expensive foreign funding.”

Brazil’s central bank changed liquidity rules Dec. 23 to entice big lenders to purchase loan portfolios from smaller banks. The monetary authority said it would allow banks to use part of their required reserves to purchase credit portfolios and bonds, known as letras financeiras, from lenders whose capital doesn’t exceed 2.2 billion reais.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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