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Thursday, January 21, 2010
Today's News Headlines
* Banco Galicia to invest US$53mn in 2010 - Argentina
* ANALYSIS: Corp Banca 2009 earnings surprise market - Chile
* HSBC to start selling insurance, pension products early this year in Chile, Colombia, Peru - Regional
* Roundup: BES Investimento, Banco ibi ratings, ABBC check deal - Brazil
* Bounced checks at record high in 2009 - Serasa Experian - Brazil
* Financial sector sound but banking sector reform is key - IMF - Guatemala
* Financiera Independencia begins second share offering - Mexico
* Banks' lending sees 7.2% drop in November - BBVA Bancomer - Mexico
* Moody's assigns first-time ratings to Metropolis finance company - Argentina
* Banorte looking to purchase more pension fund managers - Mexico
* HSBC out of the race for Crédit Agricole unit - paper - Uruguay
* CEF sees 30% loan growth this year - Brazil
* IN BRIEF Moody's corrects outlook on RCI Banque branch - Argentina
* IN BRIEF Davivienda to launch US$639mn bond program in 2010 - Colombia
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* Banco Galicia to invest US$53mn in 2010 - Argentina
Argentina's Banco Galicia plans to invest 200mn pesos (US$53mn) in 2010, with half going to IT systems and the other half to revamping existing branches, installing new ATMs and refurbishing corporate buildings, Pablo Firvida, IR manager of the bank's parent group Grupo Financiero Galicia (NasdaqCM: GGAL), told BNamericas.
Banco Galicia, one of Argentina's top three private banks, today operates through 327 branches and 670 ATMs.
Firvida said the bank expects to grow both private sector lending and deposits between 20-25% in 2010.
Among the bank's main challenges for this year, the executive named increasing financial intermediation with the private sector, reducing public sector assets with low returns as well as the bank's debt in US dollars and creating synergies with consumer finance company Compañía Financiera Argentina (CFA), which it acquired last June.
Back then, troubled US insurer AIG (NYSE: AIG) agreed to sell 80% of its shares in CFA to Banco Galicia for 133mn pesos. Firvida said the deal complements its already existing credit card business, Tarjetas Regionales.
"While the bank always analyzes M&A opportunities, the purchase of CFA and its takeover - which is still awaiting approval by the central bank - will be a priority this year," he said.
Firvida also said the bank will likely not need to issue bonds in 2010, although Tarjetas Regionales or CFA may do so, either in pesos or US dollars.
As for the bank's level of private sector non-performing loans (NPLs), Firvida said that it reached a peak in 2009 and that the bank has already started seeing a positive evolution. Private sector NPLs improved to 5.48% at the end of the third quarter last year from 5.90% at end-Q2.
And although the bank does not give guidance regarding its net income, it expects to improve its 2009 results this year, Firvida said. Banco Galicia will announce its fourth quarter and full year 2009 results on February 16.
According to Deutsche Bank (NYSE: DB), Banco Galicia's fourth quarter net income will likely fall 14% compared to the 63mn pesos it posted in 3Q09.
Loans are expected to grow 4% compared to end-December 2008, while asset quality may show signs of improvement and provisions should be similar to 3Q09. Meanwhile, the net interest margin should be relatively stable and fees should grow above expenses as the bank focuses on controlling costs, Deutsche Bank said in a research note.
Banco Galicia had 27.4bn pesos in assets and 2.01bn pesos in equity as of end-September.
By Jorge Porter
Business News Americas
Editor's Choice
* ANALYSIS: Corp Banca 2009 earnings surprise market - Chile
Chile's Corp Banca (NYSE: BCA) booked an 85.1bn-peso (US$172mn) profit in 2009, mainly helped by good treasury results and lower provision expenses as the bank readies itself for a lower-risk scenario amid a recovering economy.
Analysts told BNamericas that both the full-year and fourth quarter earnings of 26.2bn pesos came as a surprise as they had forecasted lower results since the bank - as well as the rest of the financial system - struggled with sluggish loan demand and negative inflation in 2009. Chilean banks benefit from inflation as they have more assets denominated in the country's inflation-linked unit, the UF, than liabilities.
While results are not directly comparable to previous years as banks in Chile adopted new IFRS accounting standards in 2009, Natalia Aránguiz, analyst at Santiago research firm WAC, said the bank posted a 51% nominal increase in 2009 earnings, way beyond the system's average of 16%.
According to Aránguiz, the bulk of last year's profits were explained by extraordinarily good returns from the bank's treasury department.
"Compared to its peers, Corp Banca showed the best indices of activity in terms of lending in November, and it was the second most efficient bank in this group. But it's also the one with the lowest level of provisions over loans," she said.
Loan loss provision expenses came in at 68.9bn pesos in December, compared to 75.0bn pesos in November and 71.9bn pesos in October, according to data published by banking regulator Sbif.
Chief banking analyst Javier Pizarro at local financial firm LarrainVial said the bank's fourth quarter results came a little ahead of expectations, also due to lower than expected provision expenses.
"As for the annual result, it was above our estimates, way above the market's expectations and I'd dare to say over the bank's estimations as well. 2009 turned out to be a great year for Corp Banca because even as the portfolio risk increased, it did so in a controlled way, and the excellent results from its treasury operations offset the negative effect of deflation over net interest margin," he said.
2010 CHALLENGES
Nevertheless, Corp Banca still faces several challenges in 2010, analysts say.
"Corp Banca must show a sustainable growth in loans, since this item supports long-term revenue growth. The bank's good results in 2009 create a strong comparison base, so 2010 profits may not show strong annual growth. And last but not least, Corp Banca must demonstrate it can deliver a competitive ROE and that its good performance can be sustained over time," Aránguiz said.
According to Jorge Chang, head of studies at local financial services firm EuroAmérica, Corp Banca will face a booming economy in 2010 and the bank should expect more competition from its peers. "So, the bank's main challenge is to compete efficiently, grow and take advantage of this more optimistic scenario," he said.
Another main task ahead this year will be to take part in the battle for the low-income segments of the population, to which banks have begun lending again, Chang said.
LarrainVial's Pizarro said the bank's main challenges this year will be to improve profitability and the size of its consumer lending portfolio, as Corp Banca is still heavily weighted towards corporate loans.
"The bank's margin/risk ratio in the consumer lending portfolio is significantly weaker than those of its peers," he said, adding that another task will be to increase its market share in sight deposits to improve its funding base.
Finally, Chang said that in 2010, market participants will have to keep an eye on the investments the bank's ultimate controller - businessman Álvaro Saieh - manages and the potential synergies that may arise from those businesses with Corp Banca. Over the last year, Saieh made heavy investments in the insurance and supermarket businesses.
In a research note, local brokerage Banchile said it expects Corp Banca's net interest margin to remain under pressure in January considering the negative 0.3% inflation registered in December.
Banchile also reiterated its positive view for the banking sector in 2010, led by a resurge in loans, lower provisions and a slight pickup in net interest margin.
Corp Banca - controlled by Saieh's holding Corp Group - is the fifth largest bank in Chile in terms of loans.
By Jorge Porter
Business News Americas
* HSBC to start selling insurance, pension products early this year in Chile, Colombia, Peru - Regional
HSBC (NYSE: HBC) will in March or April begin selling pension, life and other insurance products through its banking branches in Chile, Colombia and Peru, HSBC Latin America CEO Emilson Alonso told BNamericas.
"We will use our broad existing network, and in those countries where we do not have these insurance products, we'll work with strategic partners that can provide us with these policies so we can start distributing them," he said, adding that in the case of Chile the bank will offer voluntary pension plans, locally known as APV.
Alonso said the planned move is the first step towards HSBC taking a more active role in the aforementioned countries' insurance markets.
"We're always looking for purchase opportunities, but they're not easy to find," he noted.
HSBC's bancassurance activities, largely undertaken within the bank's personal financial services segment, contributed with 35% of the group's US$508mn pre-tax profit in 1H09 in Latin America, a figure that Alonso considers "fair."
"Insurance is a key area for us. The region is one of the leaders for HSBC in the world in terms of the participation of insurance in profits, and it will remain this way," Alonso said.
"There's an opportunity here because there is demand and the chance to penetrate the market in the life and pension segments as well as in the non-life market. We'll keep investing strongly and turning the operations efficiently, bringing products from Asia and Europe to Latin America."
HSBC saw net earned insurance premiums from its Latin American operations fall 19.6% to US$724mn in last year's first half compared to the same period 2008.
The bank also has operations in Argentina, Brazil, Costa Rica, El Salvador, Honduras, Mexico, Panama, Paraguay and Uruguay, and representative offices in Guatemala, Nicaragua and Venezuela.
By Jorge Porter
Business News Americas
* Roundup: BES Investimento, Banco ibi ratings, ABBC check deal - Brazil
S&P has assigned global scale BBB-/A-3 and national scale brAAA/brA-1 counterparty ratings to Brazilian investment bank BES Investimento do Brasil, with a stable outlook.
The ratings are mainly due to the bank's strategic importance to its parent, Portugal-based Banco Espírito Santo de Investimento, a subsidiary of Banco Espírito Santo, the ratings agency said in a release.
"This strong ownership structure supports the bank's better-than-peers financial flexibility and allows it to take advantage of both its relationship with global customers and its parents' banking expertise," S&P analyst Raphael Nascimento was quoted as saying.
The rating also reflects the bank's small size, the challenges it faces in operating in highly competitive market segments including capital markets and asset and wealth management, and its volatile profit generation, since most of the bank's earnings come from treasury and investment banking, S&P said.
To read the full statement in English, go to this link (http://www.bnamericas.com/reports/133856.pdf)
To read the full statement in Portuguese, go to this link (http://www.bnamericas.com/reports/133857.pdf)
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Fitch has affirmed and withdrawn its national scale long and short-term ratings of AAA and F1+, respectively, on Brazil's Banco ibi, the agency said in a statement.
Formerly the financial arm of retailer C&A, ibi was purchased by fellow Brazilian bank Bradesco (NYSE: BBD) in a deal that closed late last year.
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Brazil's midsize banking association ABBC has signed a US$500,000 contract with Kofax for a distributed capture solution for credit union SICREDI Bank, Kofax said in a press release.
ABBC will implement Kofax software to capture and extract data from the over 20mn checks and related financial documents received annually at its branch locations and export the resulting data and images into ABBC, SICREDI and central bank repositories.
By Business News Americas staff reporters
* Bounced checks at record high in 2009 - Serasa Experian - Brazil
Bounced checks in Brazil reached a record high last year due to the impact of the global crisis and the economic downturn, local credit information firm Serasa Experian said in a statement.
Of total written checks in 2009, 2.15% lacked funds, which has been the highest figure since Serasa began tracking bounced checks in 1991.
The biggest impact on the full-year figure came from the first half of 2009, when 2.30% of all checks bounced.
Things started to improve in the second half with the Brazilian economy recovering. During that period, bounced checks dropped to 1.99% of the total.
By Business News Americas staff reporters
* Financial sector sound but banking sector reform is key - IMF - Guatemala
Although Guatemala's financial sector remained sound despite the economic slowdown, the pending banking sector reform is a high priority, the IMF executive board said in a statement concluding its 2009 consultation with the country.
Congressional approval and subsequent implementation of the proposed amendments to the country's banking law would help reduce risks from offshore operations and connected lending, enhance regulators' enforcement power and improve bank resolution procedures, the board said.
The measures adopted in the face of the global crisis to reduce risks to the financial system, including continuous onsite supervision, temporary and enhanced liquidity provisioning mechanisms as well as tighter provisioning requirements helped the system stay resilient.
"While nonperforming loans have risen and profitability declined, liquidity and solvency ratios have remained adequate. As banks' deposits are growing and credit is stagnant, overall liquidity is ample, inducing banks to repay foreign credit lines," the statement reads.
The reform, which was introduced in mid-2009 and is now due for approval early this year, mandates improved risk and liquidity management, among others, through modifying existing laws and adding additional articles.
Recent efforts to strengthen supervision and regulation of the financial sector have contributed to its resilience in the face of the global crisis, the IMF said.
By Business News Americas staff reporters
* Financiera Independencia begins second share offering - Mexico
Mexican multiple purpose finance company (Sofom) Financiera Independencia has begun a second offering to shareholders of the remaining 5.1mn shares of an up-to 85mn-share capital increase, the company said in a statement.
Financiera Independencia (Findep) is in the midst of an 850mn-peso (US$67.0mn) capital increase through the issue of 85mn shares at 10 pesos each. US hedge fund Eton Park Capital Management purchased 66.5mn of the shares.
Shareholders have until February 5 to purchase additional shares to increase their position in the company proportionally, Findep said.
Proceeds from the increase will be used to finance the company's recent 530mn-peso acquisition of microlender Financiera Finsol and provide up to 300mn pesos in additional capital.
By Business News Americas staff reporters
* Banks' lending sees 7.2% drop in November - BBVA Bancomer - Mexico
Mexican commercial banks' total performing loans to the private non-banking sector saw a real-term year-on-year decrease of 7.2% in November to about 1.60tn pesos (US$125bn) at the end of the month, according to a report from BBVA Bancomer.
October also saw a year-over-year drop, with overall credit down 8.3%, while November 2008 had seen credit up 8.3%.
Housing loans in November were up 7.3% on the year-ago month to about 322bn pesos, an improvement on 2.9% growth in October but lower than the 9.9% rise 12 months prior. The increase, however, was likely due to a transfer in the month of mortgage loans denominated in Mexico's inflation-linked unit (UDI) to pesos, the report reads.
Consumer loans were down 20.2% in real terms year-on-year to about 377bn pesos, following a slightly higher drop in October and compared to a drop of 5.6% in November 2008. The consumer loan book has been shrinking at a steadily slower rate each month in the past year and should stop shrinking in the early months of 2010 if this trend continues, according to the bank.
Performing loans to businesses dropped 3.5% in November to about 848bn pesos, slightly worse than the 3% year-on-year drop seen in October and compared to an increase of 18.1% in the year-ago month.
Loans to non-bank financial entities were down 27.2% in the month to some 54bn pesos, a slight improvement on the drop a month before and compared to a contraction of 3.2% in the year-ago month, BBVA said.
By Business News Americas staff reporters
* Moody's assigns first-time ratings to Metropolis finance company - Argentina
Moody's has assigned a bank financial strength rating of E+ to Argentine finance company Metrópolis Compañía Financiera.
Moody's furthermore assigned long and short-term global local currency deposit ratings of B3 and Not Prime, as well as long and short-term foreign currency deposit ratings of Caa1 and Not Prime.
Moody's has also assigned a Baa1 local currency and a Ba1 foreign currency deposit rating to Metrópolis on a national scale. The outlook on all the ratings is stable, the ratings agency said in a report.
The ratings reflect Metrópolis' very modest market share and small, niche business franchise, which constrains earnings generation. Metropolis is primarily focused on foreign exchange operations, and is now expanding into factoring services for SMEs, following its acquisition of Tutelar Compañía Financiera in 2008.
Metrópolis is challenged to enhance its risk management framework and by corporate governance issues, such as those that arise from its private ownership and lack of board independence, Moody's said.
The company had assets of 71.4mn pesos (US$18.8mn), deposits for 36.3mn pesos and equity of 22.7mn pesos as of September 2009.
To read the full report in English, go to this link (http://www.bnamericas.com/research_detalle.jsp?idioma=I&documento=1013044&id_sector=0)
To read the full report in Spanish, go to this link (http://www.bnamericas.com/research_detalle.jsp?idioma=E&documento=1013044&id_sector=0)
By Business News Americas staff reporters
* Banorte looking to purchase more pension fund managers - Mexico
Mexico's Grupo Financiero Banorte is not done purchasing private pension fund managers (Afores), according to a company executive.
"We have an aggressive plan for growth in the sector, so if new opportunities arise to acquire other [pension] books, we will," Banorte's director of long term savings, Fernando Solís Soberón, was quoted as saying by paper Excelsior.
The group's pension manager, Afore Banorte-Generali, acquired Afore Argos, IXE Afore and Afore Ahorra Ahora in 2009.
The purchases, which were paid for with the pension unit's own earnings, brought its assets under management to 72.3bn pesos (US$5.66bn) and clients up by some 700,000 to 3.9mn, Solís said. Banorte stayed at 6th in the market in terms of assets, although it increased its share to 9% from 7%, and rose to 4th from 5th in terms of clients.
Up until last year the company had focused on organic growth, which will remain a focus, as acquisitions depend on companies offering to sell, he said.
The company will not give the price of the acquisitions in order to leave itself negotiating room for future deals.
By Business News Americas staff reporters
* HSBC out of the race for Crédit Agricole unit - paper - Uruguay
UK bank HSBC (NYSE: HBC) has been left out of the imminent sale of the Uruguayan unit of France's Crédit Agricole, as the offer it presented was deemed too low, Montevideo daily El País reported, citing sources close to the sale.
Brazil's Itaú Unibanco (NYSE: ITUB) and Spain's BBVA (NYSE: BBVA) remain in the race for Crédit Uruguay, with offers that the sources told El País are "neck to neck."
Crédit Uruguay's CEO Marcelo Oten on Monday (Jan 18) traveled to Paris to attend the bank's executive committee meeting in which a decision will be made.
Once Crédit Agricole chooses one of the offers, a due diligence process will begin which will take no less than two months.
Crédit Agricole's investment and corporate branch Calyon is acting as broker in the sale.
Crédit Uruguay is the fourth largest private sector bank in the country, with 24.2bn pesos (US$1.21bn) in assets and 1.71bn pesos in equity as of end-November, according to central bank figures.
Crédit Agricole entered Uruguay in 1998, when it founded Banco ACAC Crédit Agricole in tandem with cooperative ACAC. In 2004 it became Crédit Uruguay.
By Business News Americas staff reporters
* CEF sees 30% loan growth this year - Brazil
Brazilian federal savings bank Caixa Econômica Federal (CEF) expects to boost lending to individuals by 30% this year, local news service Agência Estado reported.
The bank lent 125bn reais (US$69.8bn) to individuals in 2009, according to preliminary figures presented Tuesday (Jan 19) to finance minister Guido Mantega by CEF's president Maria Fernanda Coelho.
The executive highlighted that the 2009 figure was a milestone as it was the first time the bank lent over 100bn reais in a year.
Fernanda Coelho said that loan growth was around 56% last year and that 46.9bn reais of the issued loans went to housing, adding that full details of the balance sheet would be published in February.
By Business News Americas staff reporters
* IN BRIEF Moody's corrects outlook on RCI Banque branch - Argentina
Moody's has corrected the outlook on the ratings of the Argentine branch of France's RCI Banque. The outlook is currently stable, the ratings agency said in a report.
The last rating action on RCI Banque, the parent company, was on November 23, 2009 when the bank financial strength rating (BFSR) and long term ratings were downgraded to C-/Baa2 and assigned a stable outlook.
The long term (LT) issuer rating of RCI Banque Sucursal Argentina was not impacted by the downgrade, since it stands at Ba1, being capped by the local currency ceiling. However, the LT issuer rating incorrectly appeared to be under review for possible downgrade on moodys.com.
By Business News Americas staff reporters
* IN BRIEF Davivienda to launch US$639mn bond program in 2010 - Colombia
Colombian bank Davivienda plans to issue up to 1tn pesos (US$511mn) in senior bonds and 250bn pesos in subordinated bonds in several tranches this year, the bank told local financial watchdog Superfinanciera in a brief statement.
Davivienda, owned by the local Bolívar group, is the country's fourth largest bank.
By Business News Americas staff reporters
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In-deph interview
* BancoSol takes top spot in microfinance clients, sticks to its roots
Kurt Koenigsfest
CEO
BancoSol
Bolivia
http://www.bnamericas.com/interviews/banking/Kurt_Koenigsfest_,BancoSol,/170884351
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Main companies covered in today's news
* Banco de Chile S.A.
http://www.bnamericas.com/company-profile/en/Banco_de_Chile_S,A,-Banco_de_Chile/170884351
* Corp Group Banking S.A.
http://www.bnamericas.com/company-profile/en/Corp_Group_Banking_S,A,-Corp_Group/170884351
* Banco Central do Brasil
http://www.bnamericas.com/company-profile/en/Banco_Central_do_Brasil-BCB/170884351
* Associação Brasileira de Bancos
http://www.bnamericas.com/company-profile/en/Associacao_Brasileira_de_Bancos-ABBC/170884351
* Grupo Financiero Galicia S.A.
http://www.bnamericas.com/company-profile/en/Grupo_Financiero_Galicia_S,A,-Grupo_Financiero_Galicia/170884351
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