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Bank of the Year 2012: Rates of change

Nov 1, 2012

Latin banks have come a long way – and today, the contrast with Western lenders could hardly be more stark

More than five years since the onset of the financial crisis and the global banking industry remains a pale shadow of its former self. News at the end of October that Swiss bank UBS was to shed 10,000 jobs underscored just how much has changed ­ and what is yet to come.

Yet while Western lenders struggle with the legacy of the crisis and effects of a tightening regulatory screw, the picture in the southern hemisphere could hardly be more different.

For countries in Latin America that have achieved enviable growth numbers while keeping inflation in check, their banks today are a source of pride and strength. Banks from Chile, Colombia and Peru plan ‹ and are achieving ‹ regional expansion. Mexican companies shine as the star assets of multinational groups whose parents (outside the region) continue to show signs of fragility.

Banks from outside the region that shed assets find they have been quickly scooped up by growing and aggressive local-turned-regional players.

Despite more onerous capital requirements, Latin American banks have never had better access to funds domestically and internationally. Tier- two issuance flies off the shelves to international buyers at tight pricing. The region¹s banks have led the way in debt capital market innovation as well, with innovations including Euroyen issuance and a tier one perpetual non-cumulative junior subordinated bond.

And those that needed it have also found the equity capital markets wide open.

This is not to say that life has been easy for all. Domestic markets are still susceptible to bad news from abroad. And some governments continue to make life more challenging for banks.

Caution is once more a theme, and indeed a virtue, this year. In markets large and small the biggest banks have the stability and resources to withstand all manner of government intervention.

The LatinFinance Banks of the Year Awards seek to identify standout institutions in the region¹s diverse markets. In addition to examining size, growth, profitability and other quantifiable aspects, the process takes into account strategic moves and other less tangible variables.

In more challenging environments, safety and conservatism are rewarded.

Where governments and other factors make life difficult, the top banks face these challenges in the most prudent ways. In safer, and in some cases booming, markets, more opportunistic factors may be considered in addition to size and strength.

In all cases the winners point to the very best about each country¹s banking system and indeed their economies and the region¹s strengths on the whole.

What¹s clear is that this year there has been much for Latin banks to celebrate. LF



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