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News through April 8


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The Road to Basel IV: Navigating the challenge facing European banks


Basel Framework- Utilizing data to analyze the capital position of European banks.

News through April 8

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

On the M&A front

* Brazilian antitrust regulator Cade said it will that its plenary councilapproves Banco Bradesco SA'spending acquisition of HSBC Bank BrasilSA - Banco Múltiplo. Cade's legal opinion does not require Bradescoto sell any of its assets to obtain a final authorization for the deal, but obligesit rather to sign an agreement with Cade mitigating some fair competition .

* Following the merger of Banco Itaú Chile with CorpBanca, the two banks have unifiedunder the name Itaú CorpBanca.In conjunction with the move, CorpBanca's ticker symbol on Santiago's stock exchangechanged to ITAUCORP fromCORPBANCA, while its NYSE ticker symbol changed to ITCB from BCA.

Legal matters

* Itaú CorpBanca CEO Milton Maluhy said the new bank's managementwas not involved in the ongoing disputebetween CorpBanca and banking regulator SBIF over a $30 million fine related toloans to companies linked to Chilean firm SociedadQuimica y Minera de Chile SA.

* BTG Pactual Groupsaid a four-month investigation conducted by an external committee found linking the bank to variousallegations tied to the arrest of former Chairman and CEO André Esteves.

* Banco Centraldo Brasil has appointeda committee to investigate the collapse of BancoAzteca do Brasil SA, which has been in extrajudicial liquidation sinceJanuary. The central bank ordered the bank's liquidation in early 2015, citing itsfinancial situation and serious violations of regulations governing the institution'sactivities.

* Argentine consumer defense association ADUC has filed a class-actionlawsuit against over the exchange rate applied by the bank to sales of foreign exchange for traveland tourism abroad. It seeks to block the bank from applying an exchange rate thatthe ADUC believes to be unlawful, as well as compensation for the allegedly overpaidamounts.

* Belize Bank Ltd.still has to pay Evergreen E-Pay Solutions Ltd. more than $3.3 million for unexpectedlyterminating a businessdeal with the U.S.-based e-merchant company, Evergreen director Robert Allen said.In late 2015, the Belize Supreme Court ruled that the bank wrongly ended a writtenbut unsigned agreement with Evergreen related to Internet payment services and areferral program for prospective e-commerce merchants.

Regulatory boulevard

* Mexico's banking regulator CNBV has raised capital requirements for Mexican credit institutionsfacing an adverse situation in financial markets in order to better protect thebanking system. The new norm establishes a formula to calculate the capital bufferthese institutions must hold, known as the Contracyclical Capital Buffer.

* Argentina's central bank has created a new inflation-indexed unit for mortgage loans,known as the Unidades de Vivienda, or UVI, in an effort to make housing more accessiblefor Argentine families. Six banks have already agreed to offer these types of loans,which will have initial payments significantly lower than conventional mortgages.

* Paraguay's senate approved a reform of the banking law to raise the minimum capital requirementsfor banks and other financial institutions. The minimum capital requirement forbanks will be increased to 50 billion Paraguayan guaraníes from 10 billion guaraníes,while the minimum requirement for other financial entities will rise to 25 billionguaraníes from 5 billion guaraníes.

Strategic options

* BTG Pactual will soon announce a $1.6 billion plan to separateits commodities trading business into its own firm, Bloomberg News citing "a person familiar withthe matter." The move reportedly comes in an attempt to hold onto company talentand shield the unit from the bank's ongoing scandal following the arrest of formerBTG Pactual Chairman and CEO Andre Esteves in November 2015.

* Banco do BrasilSA is expandingits wholesale division to provide advisory services to corporate clients lookingto restructure their finances. Possible solutions include mergers, debt extensionsand repurchases. The state-run bank already has 34 such transactions in the pipelineand another 50 under consideration, said Maurício Maurano, the bank's vice presidentfor wholesale banking.

* Faced with the decreasing use of credit cards in Mexico, competitionis intensifying among banks for credit card customers, mainly by offering lowerinterest rates to clients from other banks, Mexican bank executives said.

* Banco Ripleyis reportedly working with consultants to expandits range of products and make its operations more efficient. The bank's operatingcosts reportedly rose in the fourth quarter of 2015 due mainly to higher provisions,but this was partially offset by a reduction in non-operating expenses.

* Caixa EconômicaFederal sold a record 13.1 billion Brazilian reais in bad debt during2015 and is continuing to do so this year in an effort to clean up its balance sheet,according to a report.The sales represent a marked increase from a year earlier, when the state-controlledlender divested about 8.3 billion reais in defaulted debt. However, the move, whichanalysts say distorts Caixa's reported default rates, has come at a cost. The bankreceived just 439.3 million reais for the 13.1 billion reais of nonperforming debtsold in 2015; by comparison, it got 1.6 billion reais for a far lower amount ofdefaulted debt sold in 2014.

* Grupo FinancieroSantander Mexico SAB de CV signeda memorandum of agreement with the Korea Trade Insurance Corp., or K-sure, worth$500 million to finance the export of Korean products and services to Mexico. Theannouncement came shortly after BancoNacional de Comercio Exterior SNC said that it had reached an MOU withK-sure establishing cooperation mechanisms between the two countries for co-financingand co-guarantees of loans in Mexico or in third-party countries.

Capital moves

* Banco Consorcioshareholders approved a capital increaseof 17.70 billion Chilean pesos through the capitalization of 50% of the company's2015 profits.

* China ConstructionBank Corp. is seeking authorization from Chinese banking regulator CBRCto inject $200 millionof capital in Brazilian unit ChinaConstruction Bank (Brasil) Banco Múltiplo SA.

* Banco DaviviendaSA made a capital injectionof 17.00 billion Costa Rican colones, or about $31 million, to unit .

* Banco Bradesco received approval from the central bank for a planned 8.00 billionBrazilian reais capital increase.

* Banco Interamericanode Finanzas SA's board approved a dividend payment relating to 2015 profits totaling 20.6 millionPeruvian soles.

* Shareholders of BanescoBanco Universal CA approved a cashdividend payment for preferred shares of up to 22.0 million Venezuelanbolivares.

* Banco Internacionaldel Perú SAA declareda dividend payment of about 16.70 céntimos per share corresponding to the net profitrecorded in 2015.

* Grupo Aval Accionesy Valores SA shareholders approved the distribution of a monthly cash dividend of 4.90 Colombianpesos per month from April to September 2016.

* Grupo FinancieroInteracciones SA de CV plans to raisebetween 3 billion Mexican pesos and 5 billion pesos by issuing a certificate ofcapital development in the second quarter.

* Banco Agropecuarioreceived a $30 millionrevolving credit line from development bank BancoDe Desarrollo De América Latina.

* Banco Pine SA'sboard approved a payment of intereston equity totaling 19 million reais, or about 16.29 centavos per share,for the first quarter of 2016.

In other news

* In February, Chilean banks reported 91,756 with a total balance of45 billion pesos, of which around 40 billion pesos is in the local currency andthe rest is in dollars and other foreign currencies, the SBIF said.

* Meanwhile, the Chilean banking sector's net profit 1.06% in the first two monthsof 2016 to 276.14 billion pesos compared to the same period a year ago, SBIF said.The decrease was mainly the result of higher spending on loan provisions as theratio of provisions to total loans rose to 2.50% in February from 2.46% a year ago.

* Brazilian banks will continue to face pressures on asset quality and profitability as market volatilitycontinues, Moody's said. Banks' heightened risk aversion and growing conservativeapproach in lending will further weigh down on credit growth and strain borrowers'liquidity and refinancing capacity, the rating agency added.

* Along similar lines, BancoCentral do Brasil said in its most recent financial stability report that rising delinquency ratesin Brazil will put pressure on the financial system in 2016. The central bank alsoforecast lower growth for lending operations while income from services, insuranceand credit cards will support a higher contribution to banks' profits.

* For the third month in a row, withdrawals in Brazil deposits by some 5.38 billionreais in March, according to data released by the Banco Central do Brasil.

Featured this week onS&P Global Market Intelligence

* Banks named inPanama Papers, but it's just the tip of the offshore iceberg: The hugePanama Papers leak contains such a flood of information, embarrassing rich and powerfulpeople around the world, that it is easy to forget that the documents come fromonly one of what could be many law firms helping banks set up webs of companiesused to hide money offshore.

* Cost-to-incomeratios of banks worldwide: With many of the world's banks having reportedresults for the period ended Dec. 31, 2015, S&P Global Market Intelligence tooka bird's-eye view of bank efficiency around the world by looking at cost-to-incomeratios for institutions with at least US$10 billion in assets.

* Best of the Web:Banrisul comes under fire for saying a presidential impeachment could be a goodthing; and Mexico has some harsh words for Donald Trump and his latest plan to payfor a border wall.

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

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