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According to Market Intelligence, April 2023

Cayman National board backs Republic Bank offer; European banks focus on Brazil

S&P Global Market Intelligence presents the week's latest news and trends in Latin American banking.

Strike a deal

* Cayman National Corp. Ltd. said its board recommended that shareholders accept an offer from Republic Bank Trinidad & Tobago (Barbados) Ltd. to acquire a minimum of 51% and up to 74.99% of Cayman National's shares at US$6.25 each by way of a tender offer. The all-cash tender offer for the acquisition of Cayman national shares is due to expire on Oct. 22.

* Banco Bradesco SA entered an agreement to purchase 65% of Brazilian asset manager RCB Investimentos SA's nonperforming loan servicing platform in Brazil, subject to approval from authorities. The value of the transaction was not given.

Eye on Brazil

* Deutsche Bank AG, which operates in Brazil through Deutsche Bank SA – Banco Alemão, plans to expand its product offering and reinforce commercial banking activities in Brazil after devising a "more positive horizon" for local operations, country head Maitê Leite said. The executive said the Brazilian subsidiary will resume execution of its foreign exchange business by the end of the year and seeks to do the same with derivatives, credits and other financial assets.

* Banco Santander SA Chairman Ana Botín expects return on equity for its Brazilian unit, Banco Santander (Brasil) SA, to reach about 20% in 2018 even as uncertainty concerning the Oct. 7 elections in the largest economy in Latin America looms. Although the election is "important," it will only "determine the pace of development, not the direction," Botín said.

Rating agencies weigh in

* The full implementation of IFRS9 in Peru should have a limited negative effect on capital and profitability for major banks, Fitch Ratings said, adding that higher provisioning and falling asset growth have led to improved bank capital levels in recent years.

* Caixa Econômica Federal's recent announcement that it will offer payroll loans to private-sector workers backed by the FGTS workers' severance fund will help the bank bolster its asset quality and capital, according to Moody's.

In other news

* The lower house of the Chilean Congress approved the country's new banking law, which brings the regulatory framework to international standards in line with Basel III. The modernization bill increases the capital requirements of the banking industry and includes new rules that are meant to strengthen the tools available to financial regulators to prevent banks from becoming insolvent.

* Banco Bradesco and the Fidelity Group terminated their joint venture in Brazil-based credit card processor Fidelity Processadora SA. Bradesco said the termination would reduce processing costs and increase the efficiency of its credit card business.

* Separately, Banco Bradesco obtained a brokerage license from Argentina's market regulator to operate on the domestic exchange.

* California-based cybersecurity firm FireEye believes that North Korean hackers APT38 were behind the $10 million cyber theft that hit Banco de Chile in May. The group reportedly targeted at least 16 organizations in 11 countries in an attempt to raise funds internationally.

Featured this week on S&P Global Market Intelligence

* In a polarized election, Brazil's economic future hangs in the balance: Brazilians on Oct. 7 will cast their ballots for their next president, with polls suggesting that the two candidates most likely to progress to a run-off vote are polar opposites with drastically different ramifications for the country's economic future.

* Most LatAm sovereigns end Q3 with stable ratings outlooks: The vast majority of countries in Latin America and the Caribbean had stable sovereign credit ratings outlooks at the end of the third quarter as headwinds to the region's overall economic growth mounted.

* CDS spreads for Argentina rise in Q3, fall for Brazil, Mexico: Sovereign credit default swap prices for Argentina continued to rise in the third quarter of 2018, although spreads fell for other key Latin American economies such as Mexico, Brazil and Chile.

* Argentina woes hit total return for Southern Cone bank index in Q3: Total returns for Latin American bank indexes generally fared well in the third quarter of 2018, with the exception of the SNL Southern Cone Bank index, which fell amid market and currency turbulence in Argentina.

* Hires and Fires: A weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.

* Ratings Roundup: A summary of various ratings actions on Latin American financial institutions and economies.