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Brazil's Banco BV targets 5B real IPO; Caixa sets up wholesale business area

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

IPO plans

* Brazil-based Banco BV is reportedly looking to generate 5 billion reais from its planned initial public offering. The bank, which was previously known as Banco Votorantim, explored a listing last year but postponed the move to 2020, allowing it more time to meet IPO requirements on the B3 stock exchange.

* Caixa Seguridade Participações SA received approval from parent Caixa Econômica Federal to hire an underwriter syndicate that will evaluate the insurer's potential initial public offering. Assessment studies on the Brazilian insurer's divestment potential are also underway, the company said. Caixa reportedly plans to launch the IPO in April.

Strategizing

* Caixa set up a new wholesale business area that will help the state-owned bank boost corporate lending to medium-sized companies. The new division will focus on firms with annual revenues of between 30 million reais and 500 million reais.

* Mexican President Andrés Manuel López Obrador said the government approved the construction of 2,700 branches for state-owned Banco del Bienestar Sociedad Nacional de Crédito by the end of 2021. The government hopes to complete the first 1,350 branches in 2020 and the remaining by next year through a total investment of 10 billion pesos.

Rate moves

* Banco Central de la República Argentina reduced the interest rate floor on seven-day Leliq notes to 52% from 55%, the third cut in the benchmark interest rate in less than a month. The 300-basis-point cut came days after BCRA Chief Miguel Pesce said the benchmark rate will continue on its downward path in January.

* Banco Central de Reserva del Perú decided to keep its benchmark monetary policy rate at 2.25%. The central bank said annual inflation is likely to be about 2.0% over its forecast horizon and reiterated that the projection has a "moderate downside bias" on a potential weaker-than-expected domestic demand growth.

In other news

* Executives at Banco de la Nación Argentina are reportedly working to prevent the possibility that agricultural company Vicentin S.A.I.C. starts restructuring $900 million of debt. In 2019, the bank extended a loan to the company when it was unable to meet a $350 million payment due to farmers.

Featured this week on Market Intelligence

* Key rates in Latin America drop in 2019 to stave off stagnation: Central banks across Latin America and the Caribbean reduced interest rates dramatically during the course of 2019, joining a global monetary easing cycle in an effort to reignite economic growth by stoking demand for credit.

* LatAm CDS spreads ease in Q4, capping volatile 2019: Sovereign credit default swaps, as a key indicator of credit risk, receded for most major Latin American countries in the fourth quarter, with Mexico, Peru, Uruguay and Brazil posting the strongest improvements on perceived debt risk.

* Southern Cone bank index continues rut in Q4'19 as Brazil, Mexico thrive: Continued uncertainty in Argentina had propelled the SNL Southern Cone Bank index further toward negative terrain in the last quarter of 2019, while other Latin American bank indexes recovered during the period.