Balance Sheet Battles Brains

Jul 1, 2008

Pure investment banks are ramping up LatAm operations amid crisis at home. They must outsmart locals and European shops throwing balance sheet at big mandates.

by Dan Shirai and James Crombie

The collapse of Bear Stearns heralds a thorough shakeup of the global investment banking industry, which will have to retrench and refocus to survive. A beneficiary of this process is LatAm, through a rush to develop meaningful presence in key growth markets.

However, pure investment banks must rethink their approach to emerging markets if they are going to beat commercial bank competition – both local and international – which has formidable balance sheet and longstanding relationships with the rising corporate second tier. The investment banks are caught in a dilemma of maintaining profitability through sticking to a niche while also doing sufficient volume to win league table standing to demonstrate commitment. This, at a time when the rules of the game are also shifting.

“It’s an industry that is in a radical transformation from a country-centric/macro-centric approach to more industry-centric specific approach in the...

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