Bank of the Year 2017 – Argentina: Santander Río
November 7, 2017 |
Argentine lender buys Citi’s consumer business and cements its spot as the country’s largest private sector bank.
Banks in Argentina are aggressively positioning themselves to take advantage of the country’s economic and financial rebound, with many looking for ways to help ramp up growth.
In October 2016, Santander Río spent $1.4 billion to buy Citi’s consumer business, which included the US bank’s credit card, personal loan and retail brokerage business in Argentina.
“This was an excellent opportunity for us,” says Guillermo Glattstein, the head of strategic planning at Santander Río, the Argentine division of Spain’s Santander.
In bidding rounds that also saw Citi offload its retail banking and credit card businesses in Brazil and Colombia, Santander Rio beat a host of contenders, including Banco Macro and Banco Galicia, for the Argentine business. Other banks, including BBVA Francés, HSBC, Itaú and Supervielle, expressed interest in bidding but later bowed out.
The purchase of Citi’s consumer business will help Santander Río increase its market penetration, Glattstein says.
“If you compare our banking system to countries of similar size, it becomes clear that Argentina’s system is fragmented,” he says. With so many banks slicing up the market, “it raises the question if all can continue to play,” he says. “So scale is going to be fundamental going forward.”
Santander Río felt some effects of the acquisition in the second quarter this year, although its net income fell 8% year-on-year to 1.25 billion Argentine pesos. But the bank increased its total deposits to 203 billion pesos by the end of June, giving it a 12.3% market share, the highest level among Argentina’s private sector banks. Santander Río also expanded its loan book to 150 billion pesos, again placing it at the top of the private sector banks.
While Argentina’s incipient economic recovery remains fragile, Glattstein says he believes the country is poised for a potential lending boom once economic growth takes hold.
“Despite the economic challenges over the past few years, ordinary Argentines and Argentine businesses have very low debt levels,” Glattstein says.
He adds that credit growth has already started to pick up and will likely continue, particularly in commercial loans and mortgages. LF