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Deal buzz; rating agencies weigh in

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

Deal buzz

*Itaú Unibanco HoldingSA has reached an agreement to purchase Banco BMG SA's entire 40% stake in , apayroll lending joint venture between Itaú and Banco BMG. Itaú will pay about1.28 billion Brazilian reais to gain full control of the venture.

*BBVA Banco Francés SASA has completed its purchase of a 51% stake in . BBVA Francés purchased 23.97 million common shares inVolkswagen Credit for 53.04 million Argentine pesos.

*Banco de Galicia y Buenos AiresSA is expected to receive nonbinding for its financial servicesbusiness, Compañía FinancieraArgentina SA, in the first week of October. The business reportedlyis worth between $100 million and $120 million.

*Banco Indusval SAonce again rejected claims that the Brazilian bank could be to a Chinese company. Astatement from the bank saying there are currently no proposals regarding apotential sale of its business comes after a report surfaced saying that thebank is in talks to be sold to China's Shanghai Pengxin Group Co.

Rating agencies weigh in

* Facedwith a difficult operating environment, Brazil's small- and medium-sized bankshave had to adopt newbusiness models in order to thrive, Fitch Ratings said. The rating agency notedthat the country's second-tier banks have suffered from a collapse in domesticdemand and a contraction in economic growth, resulting in poor results oroperating losses in 2015 and the first half of 2016.

* Moody'smaintained its negative outlook on Brazil's banking system amid thecountry's weak economic recovery. The rating agency said it expects thesystem's profitability and asset quality "will continue to face pressuredue to the lagging effects of a deep recession from which Brazil is justbeginning to emerge."

* Thedefault rate for Latin American corporates has to a six-year high and looks tokeep increasing further, Moody's said. The speculative-grade issuer-weighteddefault rate for Latin American corporates surged to 5.3% for the 12 monthsthrough June, up from 4% a year ago.

Data shows…

* Theratio of loans morethan 90 days past due in Brazil held at 5.7% in August, unchanged from theprior month. NPLs for all credit operations were also stable month over monthat 3.6%, even though they were up 50 basis points year over year.

* Thedelinquency rate on Peruvian bank loans rose to 2.91% in August from 2.84% in the previousmonth, and was up by 0.22 percentage point from the same month a year ago,mainly due to the country's economic slowdown.

*Banco Central doBrasil now expects the country's current account to reach $18 billion this year,wider than its previous forecast of $15 billion in June.

In other news

* Brazil'snationwide banking strike continues as labor unions rejected the latest wageproposal from banking federation Fenaban. In its latest proposal, Fenabanincreased its offer for a bonus payment of 3,500 Brazilian reais, a slightincrease from its previous offer of 3,300 reais, but kept its salary hike offerunchanged at 7%. Fenaban also proposed a new salary model that would provide avalid wage agreement for two years instead of one. The unions, however,rejected both proposals, claiming they are insufficient and represent lossesfor workers.

* Followingthe recent sale of HSBC Bank BrasilSA - Banco Múltiplo to Banco Bradesco SA, HSBC Holdings Plc has obtained authorization tooperate as aninvestment bank in the country. The British banking giant injected 1 billionBrazilian reais in its remaining operations in the country and has establishednew offices in São Paulo with a staff of about 50 employees.

* Facedwith low interest rates, more regulations and cybersecurity threats, banks haveno choice but to deploy artificial intelligence in order to stayprofitable, according to UBSGroup AG CEO Sergio Ermotti.

Featured this week on S&P Global MarketIntelligence

*Colombia's economy, banks tobenefit from FARC peace deal — eventually: Colombia's historicpeace deal with the Revolutionary Armed Forces of Colombia, known as FARC,should benefit the country's economy, which could eventually help local banks.

*The Trump trade on Mexico'speso: While the U.S. presidential election is still more than amonth away, Mexico has already been feeling its impact.

*Venezuela's banking majors posthigher earnings amid hyperinflation, economic troubles: Amid severeeconomic turmoil, hyperinflation and the prospect of a sovereign default,combined earnings at Venezuela's top banks rose 28.44% year over year in thesecond quarter of 2016.

*Best of the Web:Argentina's Mauricio Macri faces backlash over the economy's dismal state;investors can't wait for Argentine corporates to resume bond sales; and LatinAmerica struggles to rejoin a global economy amid growing anti-trade sentiment.

*Hires and Fires:Scotiabank Perú SAAhas a new head, and there were director moves at ,Banco Patagonia SAand Itaú CorpBanca.

*Ratings Roundup:Moody's withdrew all of its ratings on BRB-Banco de Brasília SA.