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Caixa privatization broached; Banco Panamá-Banco Aliado proposed merger

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


* Brazilian Economy Minister Paulo Guedes said Caixa Econômica Federal should be privatized or merged with Banco do Brasil SA if the main purpose of the state-run bank is to maximize profit.

* Shareholders of Banco Panamá SA on May 30 will vote on a proposed merger with Banco Aliado SA, under which the latter will be the surviving entity.

Regulatory road

* Costa Rica's central bank lowered its benchmark interest rate for the second time in 2019, reducing it by 25 basis points to 4.75%.

* Jamaica's central bank decided to cut its policy interest rate by 50 basis points to 0.75% due to subdued inflation expectations.

* Peru's financial regulator SBS is preparing a draft for a new general banking law, which it plans to send to Congress for debate in about three years.

* Mexican banking association ABM's head Luis Rivera said the association plans to submit a proposal within the next 60 days seeking to create differentiated regulation for the sector.

* Guatemalan legislators are trying to revive a stalled law on the regulation of credit cards, which the country's highest court declared unconstitutional in December 2018.

The bottom line

* Grupo Aval Acciones y Valores SA's net income attributable to owners of the parent for the first quarter rose 27.6% year over year to 762.9 billion Colombian pesos.

* Banco Davivienda SA's net profit for the first quarter of 2019 slid 13.4% annually to 393 billion Colombian pesos.

In other news

* A political alliance in the Paraguayan Senate filed a motion urging the central bank to investigate Banco Basa SA over its alleged links to the wide-ranging Lava Jato corruption scandal in Brazil.

* Caixa Econômica Federal CEO Pedro Guimarães said the bank plans to launch a major debt restructuring program in which it will offer discounts of between 40% and 90% to support clients with unresolved debts.

* Argentina's Banco Macro SA closed its branch number 423 in General Acha, in the city of San Juan. Clients from the branch will now be serviced at branch number 410 in the same city, the capital of San Juan province.

* Banco Centroamericano de Integración Económica granted a $50.0 million global credit line to Panama-based Multibank Inc. meant to support foreign trade and small and medium-sized enterprise financing.

* Banco Santander (Brasil) SA CEO Sérgio Rial said the bank is adopting a more cautious stance as it sees a "risk of overindebtedness" among borrowers as some financial institutions have begun lending more aggressively. In response, the bank will look to lower the credit limit of about 500,000 cardholders.

Featured this week on Market Intelligence

* GDP disappointment raises hopes for record rate cuts in Brazil: Financial markets increasingly expect Brazil's benchmark Selic interest rate to hit new record lows in 2019 as economic growth forecasts for the country have become continuously less impressive.

* Chilean banks still hopeful in the face of economic disappointment: The Chilean banking sector remains optimistic for a strong performance in 2019, despite the country's disappointing economic results in the first quarter and decreasing GDP growth projections.

* 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.