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Banco do Brasil may IPO asset management arm; SBIF lowers fine on Itaú CorpBanca

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Banco do Brasil may IPO asset management arm; SBIF lowers fine on Itaú CorpBanca

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

New Year's resolutions

* Banco do Brasil SA could sell off part of asset management arm BB Gestão de Recursos-Distribuidora de Títulos e Valores Mobiliários SA in an initial public offering under the new government of Brazilian President Jair Bolsonaro, Valor Econômico reported. The state-run bank could also opt for a strategic partnership deal involving the subsidiary, which manages around 948 billion reais in assets.

* Brazilian Economy Minister Paulo Guedes said state-owned banks in the country should aim to refurbish their image and eliminate "distortions" in the public credit system following years of corruption and spiraling debt. The Bolsonaro government, which took over Jan. 1, pledged to reduce the size of the state and is reportedly studying various privatization plans, including the sale of some parts of Brazil's state-run banks.

* Operational streamlining plans announced by the new CEOs of state-run Brazilian lenders Caixa Econômica Federal and Banco do Brasil SA are credit positive because they sharpen the banks' focus on business segments that are highly relevant to earnings, according to Moody's. The plans include the disposal of noncore assets, the repayment of debt owed to Brazil's national treasury and a strengthening of cost controls.

Of fines and frauds

* Chilean banking regulator SBIF reduced a fine levied on Itaú CorpBanca for allegedly exceeding limits on loans granted to a group of companies linked to chemical firm Sociedad Quimica y Minera de Chile SA. The fine was lowered to 5.99 billion Chilean pesos from 21.76 billion pesos.

* Sernac, Chile's consumer protection agency, reached an agreement with seven financial institutions over clauses in contracts related to their responsibility in possible fraud cases. The deal follows a two-year process by Sernac, which vowed to eliminate contract clauses that sought to exempt banks from responsibility in cases where consumers fell victim to fraud by third parties.

Strategizing

* Mexican banks plan to invest more than 80 billion pesos over the next two years in areas such as technology, branch modernization and product development, according to Marcos Martínez, the president of local banking association ABM. The investments will allow more Mexicans to be integrated into the country's financial system, where only 60% of adults have a bank account.

* Mexican state mortgage lender Instituto del Fondo Nacional de la Vivienda para los Trabajadores approved measures aimed at reducing its running costs by 719.9 million pesos, General Director Carlos Martínez Velázquez said.

IPO moves

* U.S.-based Advent International Corp. plans to launch an initial public offering for Argentine payment processing firm Prisma Medios de Pago SA, El Cronista reported. Clarín previously reported that Advent reached an agreement to acquire a 51% stake in Prisma for about $725 million.

* Mexico's government plans to lower the tax rate on returns from initial public offerings to 10% from 30% in a bid to encourage more public listings, according to Finance Minister Carlos Urzua.

Featured this week on Market Intelligence

* Argentina, Costa Rica CDS spreads jump in Q4: Credit default swap prices in several Latin American countries rose in the last quarter of 2018, with Argentina and Costa Rica seeing some of the largest increases, according to Market Intelligence data.

* Hires and Fires: A weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.