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Plans of action; on balance

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Plans of action; on balance

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

Plans of action

* BTG Pactual Group is evaluating separate market listings for its investment bank and private equity operations in an effort to provide "greater transparency" for the assets of each business. The Brazilian bank said that in contemplating separate securities trading for Banco BTG Pactual SA and BTG Pactual Participations Ltd., it is aiming to provide a clearer differentiation between Banco BTG's banking and asset management activities and BTG Participations' private equity activities. It could also provide greater liquidity for Banco BTG Pactual shares by allowing those securities to be included in major trading indexes.

* Banco Macro SA reportedly is the front runner to buy Banco do Brasil SA's stake in Argentina-based Banco Patagonia SA, with nonbinding offers due to be submitted starting Feb. 15. Other banks reportedly interested in Banco Patagonia include Banco de Galicia y Buenos Aires SA, BBVA Banco Francés SA and Brazil's Itaú Unibanco Holding SA.

* Scotiabank Chile is open to additional acquisitions to achieve its goal of increasing its market share in Chile to 10% from about 6.6% currently, bank CEO Francisco Sardón reportedly said in an interview. Although the bank is not currently in any negotiations, it "is always open to investment opportunities if they fit with our long-term strategic plan and value generation," Sardón reportedly said.

On balance

* Lending volumes in Brazil fell 3.5% during 2016, marking their sharpest decline in a decade, according to data released by Banco Central do Brasil. Much of the weaker lending figure was attributable to state-run Banco Nacional de Desenvolvimento Econômico e Social, where lending volumes fell 12.8%.

* In Peru, banking association Asbanc predicted that banks there will increase their lending by 8% in 2017, nearly doubling from the 4.4% growth seen in 2016. The forecast reportedly takes into account the impact of the Brazilian construction firm Odebrecht leaving the country.

* Meanwhile Banco Inmobiliario Mexicano SA Institución de Banca Múltiple expects to lend more than 9 billion Mexican pesos for residential and commercial construction in 2017, an 11% increase from 2016, General Manager Gustavo Guzmán Grajales reportedly said. The bank plans to finance the construction of 19,000 homes and a number of small shopping centers in Mexico.

Law and order

* Brasil's federal public ministry reportedly will use the country's anti-corruption law to pursue legal charges against Safra Group, Banco Bradesco SA and others as part of the so-called "Operação Zelotes" tax and bribery case. According to Valor Econômico, federal prosecutors filed lawsuits against 13 of those under investigation, including one dealing with alleged impropriety on tax processes related to Safra Group's JS Administração de Recursos SA.

* Helm LLC filed a lawsuit and a request for arbitration against Itaú CorpBanca, alleging certain contractual breaches related to the merger that created the bank. Meanwhile, parent company Itaú Unibanco reached an agreement to postpone the deadline for Itaú CorpBanca's acquisition of the CorpBanca Colombia shares held by CorpGroup.

* Banco CorpBanca Colombia SA agreed to pay a fine of 90 million Colombian pesos as part of an agreement with Colombia's securities market self-regulator that will end an investigation into alleged irregularities in the bank's trading activities. As part of the early termination agreement, the bank agreed to adopt measures to "remove the causes" of the events that triggered the investigation, and fired executives involved in the alleged irregularities.

* Banco Central do Brasil said that it will simplify mandatory deposits requirements in an effort to free up capital and lower the cost of credit. As part of the simplification, which reduced some 80 rules connected to the mandatory deposit system to fewer than a dozen, the regulator unified the calculation and collection time periods for term, demand and savings deposits, which previously had varying time frames. The move will also gradually phase out deductions from those required reserves.

* Argentina's Finance Ministry is considering eliminating a 1.2% tax on checks and replacing it with a 2% tax on bank cash deposits, according to an El Cronista report. Recently appointed Finance Minister Nicolás Dujovne reportedly asked local bank executives to come up with a proposal that would reduce the tax on checks while maintaining or increasing revenues for the state.

Profit and loss

* Grupo Financiero Banorte SAB de CV posted a 6% increase in net profit for the final quarter of 2016 as a 7% rise in net interest income helped offset a 31% jump in provisions. Quarterly net income rose to 5.24 billion Mexican pesos, or 1.89 pesos per share, up from 4.94 billion pesos, or 1.78 pesos per share, in the year-ago period. For the full year, the bank's net income was up 13% year over year.

* Grupo Financiero Interacciones SA de CV reported a nearly 17% annual jump in its fourth-quarter 2016 profit, at 792 million Mexican pesos, as the bank saw substantially higher income from commissions. Banking subsidiary Banco Interacciones SA Institución de Banca Múltiple contributed 711 million pesos to the quarterly result, up 12.32% from a year earlier.

* Banregio Grupo Financiero SAB de CV booked a 45% year-over-year increase in its fourth-quarter 2016 profit, helped by a 38% decline in provisions for loan losses and a 20% rise in net commissions and fees. Net income totaled 715 million Mexican pesos for the three-month period, compared to 493 million pesos in the year-ago period. Banregio noted that unit Banco Regional de Monterrey SA Institución de Banca Múltiple contributed 93% of the group's quarterly profit.

* Grupo Financiero Santander Mexico SAB de CV posted a 7.5% rise in fourth-quarter 2016 net profit on the back of a 13.3% rise in net interest income and a 3.7% rise in net fee and commission income. EPS rose 11.5% year over year to 2.32 pesos from 2.08 pesos.

* In Brazil, Banco Santander (Brasil) SA recorded an annual increase of 23.77% in its fourth-quarter 2016 recurring profit as net interest income grew and loan-loss allowances fell. The company booked about 1.99 billion Brazilian reais in managerial net income for the quarter, up from 1.61 billion reais in the year-ago period. According to Reuters, the fourth-quarter 2016 profit is the lender's best quarterly result ever.

Featured this week:

US banks fortuitously pared exposure to Mexico in recent years: U.S. bank exposure to Mexico continues to be dominated by Citigroup, but exposure has declined in recent years, perhaps a fortunate development as President Donald Trump targets a key free trade agreement.

With digital platform, BTG Pactual takes aim at high-income segment: The Brazilian bank also may look to offer investments to non-resident Brazilians as it looks to take advantage of its existing business with international clients, digital banking head Marcelo Flora told S&P Global Market Intelligence.

Despite pressures, Mexican bank majors seen posting solid 2016 profits: According to S&P Capital IQ estimates, both Grupo Financiero Banorte and Santander Mexico were expected to show double-digit improvements in their 2016 profit figures.

Hires & Fires: S&P Global Market Intelligence presents a weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.

Ratings roundup: S&P Global Market Intelligence presents a summary of various ratings actions on Latin American financial institutions and economies.