One of the world's biggest development banks will begin operations in London, the first such move by a foreign bank since the beginning of the credit crunch.

BNDES, the Brazilian Development Bank, will use London as its base for expansion into Europe and elsewhere. It is looking at sites in the City and Mayfair and will sign a lease within a month, once the necessary budgetary approval is forthcoming from Brazil.

The office will be the headquarters of a subsidiary formed this year to funnel investment from the country — which has been less affected by the economic downturn than many of its peers — to the world outside.

“One of our missions is to support international Brazilian companies, to allow them to invest abroad and become global companies,” Jaime Gornsztejn, the Brazilian investment banker who will run it, said.

BNDES could do this by financing takeovers of European businesses or by facilitating joint ventures. The bank will commission a consultant to assess which sectors would be the most attractive. While several Brazilian companies, such as Petrobras, the energy group, are world players, less well-known businesses have invested in pharmaceuticals and IT services.

The bank chose London because of its favourable position on world time zones and because it already hosted “an interesting cluster of organisations similar to ours”, said Mr Gornsztejn, 40, who has spent most of his career at BNDES, although he has been on secondment to KPMG Corporate Finance in London over the past year.

The news comes not long after a trip to Brazil and other South American countries by Ian Luder, the Lord Mayor, to promote the capital as a financial centre. He told The Times: “Brazilian companies are poised to internationalise, using London as a base, and the giant development bank BNDES will be right at the heart of that. Its move here, along with the runaway success of Lloyd's of Brazil [the insurance market has an office in Rio de Janeiro] marks a new era in the partnership of Brazil and the UK.”

Since its establishment in 1952, BNDES has financed large-scale industrial and infrastructure operations, and has been heavily involved in the privatisation programme. The bank also supports small and medium-sized private businesses, as well as social investments in education and health, agriculture, public transport and basic sanitation. It sponsors cultural projects in fields such as architecture, film and music.

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