Brazil's Itau Unibanco scopes out British banks

The So Paulo-headquartered bank, which is the world's tenth biggest by market capitalisation, is considering buying up RBS and Lloyds shares to be off-loaded by the government, according to a Sunday newspaper.

Itau Unibanco is thought to be considering deals in a number of countries, also including the US, as it embarks upon a global expansion.

Pedro Malan, chairman of Itau's international advisory board, was yesterday reported as saying: "We're looking (at RBS and Lloyds], of course we're looking."

But he added: "We're not in a hurry, we think we have time."

Meanwhile, an investigation by the Financial Services Authority into failings at RBS, HBOS and Bradford & Bingley has found internal breakdowns which allowed risks to go unchecked, it was reported yesterday.

The City watchdog is understood to have conducted a wide-ranging review of the three state-backed banks after commissioning PwC, Ernst & Young and BDO Stoy Hayward to look into their activities in the run-up to 2008's banking crisis. The results of the review are expected to be made public within weeks.

Although it is thought that the investigation has not found any illegal activity, it is understood that the FSA found communications failures left board members unaware of the risks being run by executives before the crisis struck.

The FSA is also understood to have questioned public statements made by the banks before they were forced to seek taxpayer assistance. The watchdog declined to comment yesterday.