Banco Santander Brazil: Beware the Buzz

Pina estimates Banco Santander Brazil's allowance for bad loans currently covers about 80% of its non-performing loans, compared to coverage of 140% and 120% respectively at its main private competitors, Itau Unibanco and Bradesco.

The only other major player in Brazil's banking industry is government-owned Banco do Brasil. Because its reserve is a bit lower than the competition, Pina feels Banco Santander Brazil could get caught playing a bit of catch-up once things turn around, not a major disadvantage, but something to be aware of. Overall, he's bullish on the company's expansion plan and market opportunity.

Buying the Spanish parent company is the better way to go at the moment in Jim Cramer's view. He told viewers of his "Mad Money" show on CNBC Tuesday that the IPO, based on its pricing range, was lined up to price at more than 20 times earnings, a bit too expensive in his opinion.

While Pina declined to comment specifically on that investment thesis, he noted that the Brazilian operations currently account for roughly 20% of the parent company's earnings, and said one attraction of the IPO is its unique exposure to Brazil's banking industry, a feature in limited supply given the oligarchy that exists in that country.

-- Written by Michael Baron in New York.