Principal Financial Group Inc. and Banco do Brasil SA have signed a memorandum of understanding that would extend Principal’s pension joint venture with the bank for the next 23 years.

Under the terms of the memorandum, and following completion of all necessary approvals and transactions, BrasilPrev Seguros e Previdencia SA will have the exclusive right to assemble and distribute pension and other long-term asset accumulation products within the Banco do Brasil network.

“We are very pleased to announce the long-term continuation of our successful strategic partnership with Banco do Brasil,” Larry Zimpleman, Principal’s chairman, president and chief executive officer, said in a press release.

“Over the past 10 years, combining the leading pension expertise from The Principal and the power of Banco do Brasil’s distribution network, BrasilPrev, has become one of Brazil’s top retirement services companies, with three million accounts and nearly $15 billion in assets under management,” Zimpleman said. “We see even greater opportunity going forward as Banco do Brasil continues to expand its distribution reach and strengthens its commitment to increasing market share.”

The government-controlled Brazilian bank has assets of $416 billion and in the first half of 2009 recorded earnings of $4 billion, with an annualized return on equity of 27.4 percent. The company’s stock is publicly traded on the Sao Paulo Stock Exchange.

Banco do Brasil branches will distribute retirement products sold exclusively by BrasilPrev for 23 years, according to a statement sent to market regulators today. In exchange, the bank will own 100 percent of new non-voting shares of BrasilPrev, reducing Principal’s stake in the company to 25 percent from 46 percent, Bloomberg reported.

Over the past five years BrasilPrev’s operating earnings have achieved compounded annual growth of 25 percent, and assets under management have grown by 43 percent. Future growth should be driven by the bank’s recent acquisition of Nossa Caixa bank, which added more than 560 branches, along with increased penetration in existing markets, the companies said.