Brazilian state-run bank Caixa Economica Federal has entered partnerships with the two largest local credit-card-networking companies, Cielo SA (CIEL3.BR, CIOXY) and Redecard S.A (RDCD3.BR), in an effort to strengthen its presence in the local card industry.

Cielo late Tuesday announced the five-year agreement with CEF to process credit-card transactions under Cielo's brand.

CEF reached a similar agreement with Cielo's rival, Redecard, earlier this week.

The deals were part of CEF's strategy to reinforce its presence in the card industry.

Earlier this year, CEF, the state-run bank Banco do Brasil SA (BBAS3.BR, BDORY) and private bank Banco Bradesco SA (BBD, BBDC4.BR) signed a memorandum of understanding to jointly operate a recently created credit-card company called ELO.

ELO was founded earlier this year by Banco do Brasil and Bradesco, the country's second-largest private bank in terms of assets, to compete with Visa Inc. (V) and Mastercard Inc. (MA) locally.

The three banks will take equal stakes in the card brand.

-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-3544-7071; rogerio.jelmayer@dowjones.com