Crystal Ball

Brazil will be the battleground for big banks.

EVEN A CURSORY EXAMINATION OF THE NUMBERS LEAVES NO doubt that the future of Latin American banking growth is in Brazil. Six of LATIN TRADE'S top ten banks by assets are in the economic behemoth. Yet the footprint by market share of foreign powerhouses is barely visible in Brazil, where the domestic market is split among a half-dozen pretenders.

Spain's Banco Santander Central Hispano (BSCH) and Banco Bilbao Vizcaya Argentaria (BBVA) are slugging it out across the region, but their presence in Brazil remains comparatively small. Citibank which recently joined the battle to be the region's biggest, kicked off with a US$12.5 billion Banamex buy in Mexico, where it's tied for the lead in terms of market share with BBVA.

This is no accident. While all three institutions are bent on building region--wide superbanks, Brazil will require huge sums of money. The lag in Brazil gives the local team time to prepare for the onslaught. Citibank is talking to Banco Mercantil de Sao Paulo, after Santander landed Banespa for $3.5 billion. BBVA has started collecting comparatively small institutions. Make no mistake, though. Nobody is done buying yet.

Having acquired positions in most other countries, the battle is shaping up in Brazil, where the top four banks--Banco do Brasil, Caixa Economica Federal, Bradesco and Itau--command nearly $220 billion in combined assets, 62% of which is concentrated in the top two, state-owned Banco do Brazil and Caixa Economica Federal. How the big private banks--Bradesco, Banco Itau and Unibanco--respond to competition will shape the year ahead, and probably result in a few more headline deals before the smoke finally clears.

Being big doesn't make you bulletproof, however. Banca Serfin slipped in assets 32% in 2000, while its loan portfolio slid 42% in the same period. J.P. Morgan posted the strongest asset growth in Mexico, but took a hit on loans in its Chile operations. The big winner, however, has been ABN-Amro Bank in Brazil, hopping from 38th to 14th rank on the LATIN TRADE list on the strength of a 370% deposit surge that enabled the financial institution to push up both loan and assets by similarly impressive amounts.

What's in the crystal ball? Mergers among smaller banks in big economies, or a feeding frenzy among the multinationals in Brazil as they look for the right grip on Brazil's enormous and technology-happy consumer market and lucrative business clients.

WINNERS & LOSERS
Latin America's top performing
banks
ASSETS
(% CHANGE 99/00)
J.P. Morgan, Mexico             240.8
ABN - Amro Bank, Brazil         153.3
Citibank, Brazil                118.0
Banco Sudameris Argentina        85.6
Primer Banco del Istmo, Panama   70.9
Banco Boavista International,   -19.9
Brazil
Banco Sud Americano, Chile      -22.3
American Express Bank, Chile    -28.3
Banca Serfin, Mexico            -31.6
Banco Bandeirantes, Brazil      -53.6
Note: Table made from bar graph
LOANS
(% CHANGE 99/00)
Bank of America, Chile          500.0
ABN - Amro Bank, Brazil         463.2
Chase Manhattan Bank, Brazil    197.9
Citibank, Brazil                121.4
Lioyds TSB Bank, Brazil         104.5
Banco Santander Bozano, Brazil  -35.4
Banco Boavista International,   -39.2
Brazil
Banca Serfin, Mexico            -41.9
J.P. Morgan, Chile              -44.6
Bancafe, Colombia               -47.3
Note: Table made from bar graph
DEPOSITS
(% CHANGE 99/00)
ABN - Amro Bank, Brazil         369.9
Banco Sudameris Argentina        93.8
BBVA Bancomer, Mexico            58.4
Primer Banco del Istmo, Panama   58.3
Banco Mercantil, Venezuela       57.2
Banco Santander Bozano, Brazil  -39.6
HSBC Bank Brasil                -50.9
J.P. Morgan, Chile              -53.6
Banco Boavista International,   -64.7
Brazil
Bank Boston, Brazil             -93.9
Note: Table made from bar graph

COPYRIGHT 2001 Freedom Magazines, Inc.
COPYRIGHT 2001 Gale Group