Banco do Brasil to buy Nossa Caixa for 5.4 bln reais

SAO PAULO, Nov 20 (Reuters) - Brazil's state-run Banco do Brasil (BBAS3.SA) said on Thursday it agreed to buy Nossa Caixa (BNCA3.SA), a commercial bank owned by the state of Sao Paulo, for 5.39 billion reais ($2.25 billion) from that state.

It will pay cash for the acquisition in 18 installments from March 2009.

Brazil's second-largest private sector bank, Itau (ITAU4.SA), agreed to buy smaller rival Unibanco (UBBR11.SA) this month, creating a Latin America financial behemoth with total assets far surpassing those of Banco do Brasil. ($1=2.4 reais) (Reporting by Alberto Alerigi; Writing by Ana Nicolaci da Costa; Editing by James Dalgleish)