S&P Global Market Intelligence presents the week's latest news and trends in Latin American banking.
Going digital
* Digital banks are sprouting up across Latin America. Wanap, Argentina's first fully digital bank, is finalizing details to start operations in May. The online bank may need to raise $22 million once it has the green light to enter the market.
* A new Brazilian digital bank under development by Banco BTG Pactual SA Chairman Marcelo Kalim and two other executives of the banking giant will reportedly be called C6Bank. The executives are said to be seeking approval from Brazil's central bank for the company, while a team is developing the technological environment for the new wholly digital lender.
* Traditional lenders are also streamlining their operations toward digitization. For example, Bancolombia SA plans to spend some 400 billion Colombian pesos in 2018 to improve its operations, service, security, product design and digitization. Bancolombia President and CEO Juan Carlos Mora noted that 8 of every 10 transactions at Bancolombia are digital.
* Banco Bradesco SA, meanwhile, could close up to 200 of its 4,750 branches this year amid an ongoing review of its brick-and-mortar network and a growing focus on digital platforms, the bank's CEO Octavio Lazari said. Bradesco is also widening its digital presence through partnerships with financial technology startups, starting with the opening of InovaBra, a co-working space for fintechs and startups to develop new products and services that can be adopted by the bank.
* Brazil-based fully digital bank Sofisa Direto has launched a bank deposit service, through which account holders can make deposits without paying interbank credit transfer fees.
Earnings buzz
* Grupo Aval Acciones y Valores SA saw a 1.8% uptick in its net income for the fourth quarter of 2017, reaching 466.7 billion pesos, despite a 52.8% increase in impairments.
* Banco Davivienda SA's consolidated net income in the fourth quarter of 2017 dropped 32.7% to 360 billion pesos, as net provision expenses saw a nearly threefold increase.
* Banco Nacional de Desenvolvimento Econômico e Social posted a slight year-over-year decrease in its full-year 2017 net profit, coming to 6.18 billion Brazilian reais, amid a decline in income from its financial intermediation business.
In other news
* Brazil's antitrust regulator Cade approved, with restrictions, Itaú Unibanco Holding SA's acquisition of a 49.9% stake in the brokerage firm XP Investimentos SA.
* BNDES incurred 5.08 billion reais in losses from operations through which it injected funds into meatpacking company JBS for the acquisition of its competitors, according to federal audit court TCU.
* Banco Central de la República Argentina officially revoked Banco Finansur SA's banking license following the start of a restructuring process.
* Chilean banking regulator SBIF granted a final authorization to Bank of China Ltd. to establish a branch in the country, noting that the bank has completed all three stages of approval.
* HSBC Bank Argentina SA is reportedly "very close" to granting a short-term loan worth around $1.00 billion to the Argentine government.
* Commercial banks in Mexico could face challenges in 2018 arising from presidential elections and ongoing talks to revamp the North American Free Trade Agreement, but the sector's large capital cushion and solid reserve coverage for nonperforming assets should allow it to cope with any potential volatility, according to S&P Global Ratings.
* Faced with elevating costs and declining profitability, Brazil's midsize banks are set for a new round of consolidation, according to a study by German consultancy firm Roland Berger.
* Argentine consumer defense association ADUC filed a class-action lawsuit against Banco de Galicia y Buenos Aires SA alleging that the bank mishandled communication when it sent certain information electronically and other documents physically.
Featured this week on S&P Global Market Intelligence
* Fintech proliferation, evolving clients compel bank branch closures in Brazil: A rapidly evolving customer profile and stiff competition from a booming financial technology sector have spurred some of Brazil's largest banks to rethink their brick-and-mortar offerings, or risk losing market share in what is one of the world's most profitable banking industries.
* 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.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
