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Labor unrest; exit strategies

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Labor unrest; exit strategies

S&P Global MarketIntelligence presents the week's latest news and trends in Latin Americanbanking.

Labor unrest

* About a month after the start of Brazil's bank employee labor strike,the majority of local unions approved a settlement offer by banking federationFenaban. The offer includes a wage increase of 8%. The proposal is higher than Fenaban'sprevious 7% offer and is in addition to a 3,500 reais bonus for 2016. Themajority of the unions also approved specific agreements for state-runBanco do Brasil SAand Caixa Econômica Federal.However, Sindicato dos Bancários de São Paulo, Osasco e Região, Brazil'slargest banking industry union, said  workers at state-run Caixa rejected theproposal in 17 cities and remain on strike.

* A storm is also brewing in Argentina. The country's national bankingunion, Asociación Bancaria, threatened to call another general strike beforethe end of October if banks do not heed its salary demands. Banks havereportedly rejected the union's calls for salary renegotiations despite thefact that inflation has reached 35%.

Strategic moves

* Banco do Brasil will not its agreement with the nationalpostal service, Correios, for distribution of its products and services throughthe latter's network that expires Dec. 2. Subsequently, Correios launched abidding process to choose a new partner.

* Banco BMGSA reached an exclusive agreement with Italy-basedGenerali for thedistribution of massified insurance products through the Brazilian lender'schannels and affiliates for a 20-year period starting in the first quarter of2017. The deal is expected to provide BMG with a financial return of 1.5billion reais.

* CitigroupInc. is renaming its Mexican banking unit and spending another$1 billion on its operations in the country to upgrade and expand itstechnological offerings and retail network.

* BancoBradesco SA said it will complete its absorption of HSBC Bank Brasil's clientsand network starting Oct. 8.

Exit strategies

* BTG PactualGroup rejected speculation that the company is consideringdelisting the companyfrom public trading, saying such a move is not being discussed.

* Citigroup will likely seal an to sell its Brazilian consumerbanking operations to ItaúUnibanco Holding SA within days, Valor Econômico reported.

* CredicorpLtd. said unit Credicorp Capital Ltd. completed its of the remaining stakes inCredicorp Capital ColombiaSA and CredicorpCapital Chile to become the full owner of both companies.

Number crunching

* Mexican commercial banks posted net profits totaling 72.25 billion pesos in thefirst eight months of 2016, up 8.77% from a year earlier.

* The Chilean banking sector's net profit in the first eightmonths of 2016 reached1.42 trillion pesos. In August, sector profits fell 20.12% from the previousmonth mainly due to lower net interest margins and net commissions, as well ashigher provisions and taxes.

* In Brazil, withdrawals outpaced deposits by 2.35 billion reais during September,bringing the year-to-date figure to about 48.19 billion reais.

* Growth in commercial banking credit to Mexico's privatesector slowed to 13.0%in August compared to the same month a year ago.

* Loan demand from consumers in Uruguay saw a slightincrease between 1%and 2% in the third quarter.

Rating agencies weighin

* The Colombian government's recent on unregulateddeductible-payroll lenders amid an investigation into lending practices shouldnot spill over to regulated, domestic banks, S&P Global Ratings said.

* Moody's expects annual growth in lending by Chilean banksto slow to about 8%in 2016, down from double-digit growth in previous years, due to the country'sworsening economic climate and slower growth in mortgages.

* Despite improving Brazil's growth forecast for 2017, FitchRatings said it expects bank lending in the country to remain .

In other news

* Investors, pension funds and government agencies areaccusing big banks of neglecting investments that went bad in Brazil and areseeking some 9.3 billion reais in compensation.

* Brazil's major banks will need to new recovery plans by year-endwith guidelines on how they willprice d respond in stressed scenarios,according to Murilo Portugal, the head of Brazilian banking federationFebraban. According to Portugal, the Brazilian banking system is solid, wellcapitalized and provisioned.

Featured this week onS&P Global Market Intelligence

* Price declines,currency depreciation knock Mexican banks' market cap rankings:Amid weaker economic prospects and a sharp currency decline, Mexican banks'market caps declined during the third quarter to push the sector's largestinstitutions lower on SNL's ranking of Latin America's top banks.

* Brazilianbanks lead Q3 total returns, while Mexico lags: Most Latin Americanbank indexes gained ground during the third quarter, with banks in Braziloutperforming the broader region.

* Itaú'spurported Citi buy leaves few options for Brazil's global retail bankclients: While the impending sale of Citigroup's Brazilian retailoperations to Itaú Unibanco is unlikely to have a substantial impact on eithercompany, the deal will mark the effective end of a yearslong exodus of largeglobal players from the country, analysts say.

* Best of theWeb: Upsets in Colombia and Brazil bring a grim picture forleftists in Latin America; Argentina's dissatisfied workers threaten MauricioMacri's government; and Jamaica bucks the dismal economic trend in theCaribbean.

* Hires andFires: BancoHipotecario SA's CFO leaves; and director moves in and .

* RatingsRoundup: S&P ups Banco BTG Pactual SA while Moody's downgrades .

S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.