However, the regulator has imposed a condition for Bradesco to refrain from making further acquisition in the next 30 months.
The purchase will enable Bradesco to increase its assets by 16% and gain 5 million clients. As of 31 March this year, the bank had 25.6m account holders, 91,000 employees and 4,509 branches, in an overall service network of 63, 552 units.
Bradesco senior vice president Alexandre Gluher was quoted by Reuters as saying: "We are up to the task, we have done our homework."
Gluher expects Bradesco to complete the integration of HSBC Brazil by October.
The official announcement on the approval by the Brazilian Administrative Council for Economic Defence s expected to come on or before 14 June 2016.
Bradesco and HSBC plan to complete the transaction early in July.
The deal is expected to lessen HSBC’s risk weighted assets by around $37bn. Net assets of HSBC Brazil including allocated goodwill stood at $4.3bn as of 31 March 2016.
HSBC said in a statement: "After the recycling of foreign exchange losses, there would be an accounting loss on sale of c.US$1.7bn. Neither the allocated goodwill nor the recycling of foreign exchange losses impact the regulatory capital that will be generated from the disposal at Group level."
However, HSBC plans to have a presence in Brazil to serve large corporate clients with respect to their international needs.
HSBC Brazil is the sixth largest bank in the country with total assets of about $45bn and total equity of nearly $3bn.
The bank has about 21,000 employees, with 851 branches in Brazil. It also has insurance and consumer finance businesses in the country.
In August last year, HSBC said that it would divest its Brazilian subsidiary HSBC Bank Brasil comprising Banco Multiplo and HSBC Servicos e Participacoes to Banco Bradesco.
The move was a part of its restructuring exercise to optimize its global network and reduce complexity.
Image: Palacio Avenida: The headquarters of HSBC Bank Brasil, at Christmas, located in Curitiba. Photo courtesy of Morio/Wikipedia.
