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RBC to sell Eastern Caribbean bank ops; Colombian magnate eyes bank launch

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

From the central banks

* Banco Central do Brasil lowered its Selic monetary policy rate by 50 basis points to 4.50%. The bank cut the rate for the fourth consecutive meeting this year as it raised its inflation projection for 2019 and maintained a forecast of a gradual economic recovery for Brazil.

* Experts expect Chile's GDP to further contract by 4% in November as violent protests in past weeks continue to impact the country's economic performance, according to Banco Central de Chile's latest economic expectations survey. The central bank survey forecasts GDP to grow by 1% in 2019 and expand 1.5% in 2020.

* Banco Central de Reserva del Perú maintained its benchmark monetary policy rate at 2.25% on the heels of lower risks from global trade tensions and a downtrend in inflation.

Buy and sell

* Royal Bank of Canada said it agreed to sell all banking operations it owns in the Eastern Caribbean to a consortium of five local banks, which include 1st National Bank St. Lucia Ltd., Antigua Commercial Bank Ltd., National Bank of Dominica Ltd., Bank of Montserrat Ltd. and Bank of Nevis Ltd.

* India-based Bank of Baroda agreed to sell unit Bank of Baroda (Trinidad & Tobago) Ltd. to Ansa Merchant Bank Ltd.

In other news

* Colombian business magnate Jaime Gilinski's group filed for an application before local regulators to develop a new wholly digital bank, through its Luxembourg-based bank Gilex Holding SARL. The new lender will be called Lulo Bank and is expected to be launched in the first half of 2020.

* Banco do Brasil SA launched inflation-linked mortgage loans tied to the IPCA consumer price index as a part of the bank's initiatives to benefit from low price increases in the country. The loans will carry a maximum term of 180 months, and their interest rates will start at the benchmark IPCA rate plus 3.45%.

* Banco BMG SA's board approved a share buyback program in which 11,994,003 preferred shares will be acquired. The program will run from Dec. 11 to Dec. 8, 2020.

* Banco Nacional de Desenvolvimento Econômico e Social said it made another 30 billion-Brazilian-real debt repayment to Brazil's National Treasury.

* XP Inc., a Brazilian financial services company and the country's biggest digital broker, will use $1 billion in proceeds from its recent initial public offering to strengthen its banking unit, CEO Guilherme Benchimol said.

Featured this week on Market Intelligence

* Top LatAm banks' net interest margins fall in Q3 as monetary easing takes hold: In a sample of 15 top Latin American banks analyzed by S&P Global Market Intelligence, most banks saw their net interest margins fall in the third quarter from a year earlier as economic growth concerns led central banks in the region to reduce borrowing costs.

* Major LatAm banks see lower return on risk-weighted assets in Q3: Eleven of the 21 biggest banks in Latin America saw their return on average risk-weighted assets, decline year over year in the third quarter of 2019, according to an analysis by S&P Global Market Intelligence.

* Civil unrest fueled Latin American currency depreciation in November: Latin American currencies led the declines among emerging markets during November in a challenging political environment, while a stronger U.S. dollar added fuel to the fire. The Chilean peso ended November at 809.46 per dollar and is projected to hover around 810 per dollar during early 2020, economist at Oxford Economics Felipe Camargo said.

* Big Mexican banks improve CET1 ratios in Q3 as LatAm peers see mixed performance: The largest banks in Latin America posted mixed results in terms of their fully loaded common equity Tier 1 ratios in the third quarter of 2019, with several Mexican banks emerging among the best performers.

* Bank cost-cutting a threat to Brazilian fintechs, says Creditas CEO: In an interview with S&P Global Market Intelligence, CEO of Creditas Soluções Financeiras Ltda. said sharp cost cutting by Brazilian banks could drive price-based financial technology models out of business.

* 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.