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Chile sets new capital rules; Republic in talks to buy for Cayman National

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Chile sets new capital rules; Republic in talks to buy for Cayman National

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

Law and order

* Banco Central de Chile SA presented new minimum capital requirements for banks to be implemented between 2019 and 2023 in line with international Basel III standards. The new short-term liquidity coverage ratio rules will be imposed in steps, beginning with 60% of the requirement in 2019 and adding 10% annually until the full total is in place by 2023.

* Colombian bank association Asobancaria proposed that the country's so-called "4 x 1,000" tax be taken off definitively from financial transactions and only be applied to cash payments. The measure looks to increase the number of people who have at least one financial product.

* Banco Central do Brasil is preparing a regulatory framework for open banking, to be implemented by 2019, in a process which will see companies, developers and banks sharing information to improve the digital financial sector. The project will seek to find solutions for standardization and accountability on digital platforms and shape rules for the financial technology industry.

Deal buzz

* Republic Financial Holdings Ltd. entered talks to potentially acquire a 51% to 74.99% stake in Cayman National Corp. Ltd. The potential acquisition would be carried out through a tender offer to Cayman National shareholders, with Republic Financial eyeing an indicative price between US$6.00 and US$6.75 per Cayman National share.

* Brazil's central bank approved the first part of Itaú Unibanco Holding SA's deal to acquire a stake in brokerage firm XP Investimentos SA although it made Itaú agree to certain commitments aimed at "reinforcing the autonomy and independence of the XP group."

Monetary minute

* The Brazilian central bank once again avoided giving guidance on its future monetary policy decisions, despite "comfortable" inflation prospects. The central bank noted that the upward pressure on inflation brought about by a nationwide truckers' strike in May has subsided, but added that uncertainty due to domestic weaknesses and global risks "generates a need for greater flexibility in the conduct of monetary policy."

* The Chilean central bank's monetary policy board ruled out lowering its policy due to the favorable macroeconomic scenario and less inflationary risks. The monetary authority is instead eyeing a hike towards the end of the year.

* Banco Central de la República Argentina shifted its benchmark rate to the seven-day Leliq central bank notes, which are exclusively for the country's banks. It created a new, four-person monetary policy committee to determine the central bank's reference rate going forward.

Rating agency briefs

* Mexico's development banks are expected to increase lending during the administration of President-elect Andrés Manuel López Obrador, but their capitalization needs to be bolstered in order to counter a rapid rise in the granting of loans, Moody's said.

* Moody's said that a move by Brazil's monetary council to simplify rules on mortgage lending is credit positive for both homebuilders and banks, as these will improve lending flexibility and strengthen financing supply and demand.

* Multilateral development bank Corporación Andina de Fomento, or CAF, continues to have enough cushion to offset the continued payment delays from Venezuela, Fitch Ratings said. However, Fitch expects a negative impact on CAF's rating should its exposure to Venezuela reaches nonaccrual status.

Earnings rundown

* In Brazil, Banco Votorantim SA's second-quarter 2018 net income soared 76.6% annually, Banco do Brasil SA's jumped 19.7% and BTG Pactual Group's rose 13.6%. Banco Pine SA swung back to a net profit after a reversal in provisions for loan losses, while higher loan-loss allocation hit Banco Daycoval SA's earnings.

* In Peru, Credicorp Ltd. saw its second-quarter profit grew 6.3% year over year, while Intercorp Financial Services Inc.'s dropped 16.1%.

Featured this week on S&P Global Market Intelligence

* 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.