S&P Global Market Intelligencepresents the week's latest news and trends in Latin American banking.
State of credit at Bancodo Brasil
* Brazilian banks are intensifyingtheir focus on payroll-backed loans by aligning with banking promoters and correspondents.Among those that have recently bankrolled in payroll loan products are , , Banco Pan SA and BancoBradesco SA. The banks' strategy comes as payroll loans have shown lowerdefault rates compared to other types of credit lines.
* Brazilian creditors of steelmaker Usiminas, which include Bancodo Brasil, have granteda 60-day extension to a current standstill agreement. Usiminas reportedly askedbanks for an extension of up to 45 days so it can organize a capital increase consideredcrucial to its debt restructuring process.
* Banco do Brasil said it disbursed 455 million Brazilian reais through a credit linetied to anticipated income tax refunds for individuals.
* Previ, Banco do Brasil's pension fund manager for its workers'retirement savings, plans to sellabout 2 billion reais of nonperforming real-estate loans, a report said. The pensionfund, which is the largest in the country, reportedly contacted investors to gaugetheir appetite for the distressed loans.
* Elsewhere, the partnershipbetween Banco do Brasil and the Brazilian postal service, Correios, which providesbanking services through Banco Postal, is likely to end this year. The bank disbursedsome 1 billion reais in banking transactions through post offices under the presentcontract, but does not consider the deal advantageous given Brazil's adverse economicscenario and changes in customer behavior due to the advance of internet bankingin Brazil.
* The bank also said its tender offer to repurchase $199.9 million of a 9.25% coupon perpetual bondwill have a positive impact of 54 million Brazilian reais, net of taxes, on itssecond-quarter results.
* Chilean banks' financing conditions remained in the second quarter compared to theprevious quarter, while demand was weaker, especially in mortgage and consumer loanportfolios. The percentage of banks that reported tighter financing conditions forconsumer loans was 36%, while the percentage for mortgages was 25%, according toa survey by Banco Central de Chile.
* Credit recovery for Brazilian consumers 3.8% in the first half of 2016compared to the same period in 2015. Consumer credit demand in Brazil also 2.1% in June from the previousmonth and expanded 3.2% in the first half year over year.
* S&P Global Ratings expects credit conditions for LatinAmerica to remain weakfor 2016 as Brazil's recession drags on and commodity prices stay low. Industrywise,S&P pointed out that banks in Latin America continue to face market volatility,stemming from spillover from external factors, while weakening currencies acrossthe region might pressure loss ratios especially on property and casualty and healthinsurers.
* Argentine insurer SancorCooperativa de Seguros Limitada reportedly signed an agreement to 30% of from the Sánchez Córdobafamily. The process could take up to one year and requires the approval of the centralbank.
* Bradesco signed an agreementwith Banco Central do Brasilcommitting to comply with certain requirements related to its recent acquisitionof HSBC Bank Brasil SA - Banco Múltiplo.In June, Brazilian antitrust regulator Cade approved the Bradesco-HSBC deal withsome restrictions that prohibit Bradesco from carrying out any further acquisitionsfor at least 30 months.
* BTG Pactual Groupconfirmed that it has submitteda nonbinding offer topurchase Portugal-based Banif-BancoInternacional do Funchal SA's Brazilian assets, which include . The transaction, if completed, will represent less than 0.5% ofBTG's total assets
Capital in motion
* Banco de Galiciay Buenos Aires SA will issue10-year subordinated bonds worth $250 million.
* The board of BanestesSA - Banco do Estado do Espírito Santo approved the distribution of 29.2 million reais in interestequity payments tied to the bank's first-half results.
* BTG Pactual's board approvedthe cancellation of previously repurchased shares equating to more than 18.8 millionunits, while authorizing the bank to buy back up to 15 million more units.
* Banco ContinentalSACEA said $54.5 million in aggregate principal amount of its outstanding8.875% senior notes due2017 were validly tendered by the closing date of its cash offer.
* InternationalFinance Corp. granted a $55 million loan to BancoPichincha CA.
* Fondo MIVIVIENDASA said it placed10-year bonds worth 310.0 million Peruvian soles.
* Mexico-based FinancieraIndependencia launched a cash tender offer for up to $200 million worth of its outstanding 7.500%senior notes due 2019.
* Banco PatagoniaSA will propose in its July 25 shareholders' meeting a distribution of 1,662,533 Argentinepesos.
* Grupo FinancieroGalicia SA unit Bancode Galicia y Buenos Aires SA approved the issuance of class II subordinated notes for a total valueof up to $300 million.
In other news
* Banco PottencialSA partneredwith fintech startup 'Contro.ly' to launch Banco Neon, a new bank that will targetyounger customers with digital banking services.
* Banco Centralde la República Argentina further eased foreign currency controls by issuing a new norm allowingArgentine companies to access local currency exchange market to pay debts on importedproducts.
* Colombian banks posted an overall profit of 4.3 trillion pesos in the first five months of2016, down 3.15% compared to the year-ago period. The lower bank profits are mainlydue to stronger competition, lower-than-expected loan growth and higher loan provisions.
* Venezuelan President Nicolas Maduro accused CitigroupInc. unit Citibank NA of planning to close the government's foreigncurrency accounts within 30 days. A separate Reuters report confirmed that Citiwill stop its correspondent banking and servicing for some accounts after conductinga periodic risk management review.
* Banco de Chilehas dissolved its HongKong-based subsidiary Banchile Trade Services Ltd., which was involved in supportingforeign trade in Asian markets.
* FPB Bank Inc.,which has been accused of operating in Brazil without authorization from the centralbank, has denied the allegations,claiming that it does not have operations in Brazil.
Featured this week onS&P Global Market Intelligence
* Best of the Web:Peruvian women are deemed to be better borrowers than men; heavily indebted Riode Janeiro looks to sell an island mansion; and the repercussions of structuraleconomic trends in the Americas.
* 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.
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