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Japan's SoftBank buys stake in Banco Inter; Banco GNB to acquire BBVA Paraguay

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

M&A table

* Japan's SoftBank Group Corp. picked up an 8.1% stake in Brazilian digital bank Banco Inter SA for about 760 million reais.

* Standard Bank Group Ltd. will sell its remaining 20% stake in Industrial & Commercial Bank of China (Argentina) SA, subject to certain conditions and regulatory approvals in China and Argentina.

* Spanish lender Banco Santander SA launched exchange offers to acquire all issued and outstanding series B shares and American depositary shares in Banco Santander México SA that it does not already own, representing about 25% of the Mexican unit's stock.

* Banco Bilbao Vizcaya Argentaria SA agreed to sell unit BBVA Paraguay SA to Banco GNB Paraguay SA for roughly $270 million. The sale price is subject to adjustments until the closing of the transaction, expected to take place in the fourth quarter.

* Brazilian investment fund FI-FGTS is looking at alternative options for the sale of its stake in Banco do Brasil SA, including a secondary public offering of the shares.

Central banks in action

* Following a surprise rate cut in June, Banco Central de Chile at its most recent monetary policy meeting considered lowering borrowing costs for the second consecutive month in July. The bank ultimately decided to leave the rate unchanged at 2.5%.

* Banco Central do Brasil said it expects economic growth to either remain stable or increase marginally in the second quarter. Expansion could accelerate in subsequent quarters, however, potentially driven by withdrawals from the FGTS and PIS-Pasep funds.

* Banco Central de Reserva del Perú loosened its policy stance by announcing a rate cut of 25 basis points, joining a number of its counterparts across Latin America that have reduced borrowing costs this year. However, the lowering of rate to 2.50% from 2.75% "does not necessarily imply additional reductions in the policy rate," it said.

Profits on the rise

* Banco do Brasil SA posted a 36.8% annual increase in its second-quarter adjusted net income to 4.43 billion Brazilian reais from 3.24 billion reais. The company now expects its loan book to end 2019 between 2% smaller and 1% larger, compared to previous guidance of 3.0% to 6.0% growth.

* Banco Macro SA's second-quarter net income jumped 124% annually to about 7.03 billion Argentine pesos from 3.14 billion pesos, with net interest income rising 85% year over year.

* Bancolombia SA's second-quarter consolidated net income surged 58.2% year over year to about 936.19 billion Colombian pesos from 591.72 billion pesos. The bank saw a 15.82% decline in net provisions, falling to 815.68 billion pesos in the second quarter.

* Credicorp Ltd.'s net profit attributable to the company rose 12.3% year over year to about 1.10 billion Peruvian soles from 977.8 million soles as net interest income grew 9.4%.

Legal matters

* An arbitration tribunal ruled that the Colombian government must pay US$61 million to banks involved in construction projects by Odebrecht SA that were later shut down amid a bribery investigation. Several banks were part of the projects but not involved in the graft scandal.

* Guatemala's constitutional court revoked a 2018 ruling that prevented the country's SAT tax agency from accessing bank account information automatically in cases of suspected tax evasion.

* Authorities in Rio de Janeiro filed 12 lawsuits against banks at the end of June in a bid to obtain information about "abandoned" assets and financial investments claimed by the city government. The city reportedly believes it is entitled to seize assets that have not been moved for a long time, including inheritance without any known heirs.

In other news

* Caixa Econômica Federal will incur a negative impact of about 300 million reais in annual revenues due to withdrawals from the FGTS workers' severance fund and PIS-Pasep employee funds.

* Banco Nacional de Desenvolvimento Econômico e Social approved an early payment of over 40 billion reais in debt to Brazil's Treasury.

* Banco ABC Brasil SA revised its expanded credit portfolio growth guidance for 2019 to between 6% and 10%, well below its previous estimate of 11% to 15%.

* Banco do Brasil SA is reportedly preparing a follow-on share offering that could total up to 7.9 billion Brazilian reais. The offering could be priced by September-end.

* Banco Pan SA is evaluating a potential share offering as an option to ensure that it meets the required percentage of free-float shares. Banco Pan currently floats 16.6% of its outstanding shares in the market, below the 25% minimum free float requirement.

Featured this week on S&P Global Market Intelligence

* LatAm economic rebound hopes wither: The IMF and various economists have slashed their 2019 economic growth estimates for Latin America and the Caribbean as disappointing GDP growth continues to plague the region.

* BCI to target 400,000 Chilean merchants with EVO JV: Banco de Credito e Inversiones SA CFO José Luis Ibaibarriaga said the Chilean bank has an opportunity to continue growing through the introduction of cashless products.

* BCI tempers credit growth expectations on slower economy, sees 2020 recovery: Weaker economic growth led Banco de Credito e Inversiones to lower its loan growth targets for the year, though company executives note that fiscal reforms and monetary easing should help Chile's economy regain strength in 2020.

* Bancolombia says improved credit quality will continue to drive profits: Executives at Bancolombia SA say sustained loan growth and improving credit quality will continue to drive results through the second half of the year.

* Chilean banking majors book higher profit in Q2 on solid operating income:Chile's three largest listed banks saw their combined profit improve year over year in the second quarter of 2019 as growth in operating income offset an upturn in expenses.

* Sluggish growth spurs monetary easing across Latin America: Policymakers in Brazil, Chile, Paraguay, Costa Rica and the Dominican Republic have lowered borrowing costs in 2019, and other central banks in Latin America may soon follow suit.

* 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.