Latin Finance - November/December 2011 - 16

global contagion risk

A big pullback from European lenders other emerging markets, the agency adds. contribute to growth.” that have been part of the trade line Nevertheless, Alejandro Díaz, the This doesn’t mean that the financial supply to LatAm would be problematic, country’s head of public credit, recognizes system can’t act as a contamination though some see euro-zone banks as less the dangers posed to banking systems channel should the situation in Europe likely to cut trade finance lines than they like Mexico’s which is largely owned deteriorate. were in the 2008-2009 credit crisis. by foreigners including Spain’s BBVA “If it keeps going, the risk is that “This is not as bad as it and Santander. According to was three years ago when the Fitch, in Mexico European Shares and Volatility, Credit Crisis vs European Crisis liquidity dried up overnight,” subsidiaries take up a 45% Repeat Performance? says Citi’s Gallo, “There market share. is a little more confidence “That could clearly take a 2008-2009 Credit Crisis that regulators have been dynamic of its own,” Díaz says. 60,000 100 monitoring liquidity levels.” “We saw something of that 90 Jaime Rivera, CEO at nature in 2008. [But] there 50,000 80 foreign trade bank Bladex, have been regulatory measures voices a similar optimistic put in place to ring-fence this in 70 40,000 view. “It was a problem, but a more efficient way.” 60 it was resolved as trade lines 30,000 50 Commodities Remain Key were reduced and central Meanwhile, commodities banks put in place credit 40 continue to be key for a region, 20,000 facilities,” he says. “They had 30 where, as Chang explains, they the means to do so and they 20 represent 50% of exports and have more firepower at their 10,000 well above that level for major disposal now than they had in 10 Bovespa Mex Bolsa VIX countries like Argentina, Brazil, 2008.” 0 0 Chile, Colombia, Peru and Aug-2008 Oct-2008 Nov-2008 Jan-2009 Mar-2009 Apr-2009 Venezuela. Strong Locals In that context, what Fortunately for Latin America, European Debt Crisis happens to China remains the region’s own banking 80,000 50 Bovespa Mex Bolsa VIX vitally important for the region, systems are now on a surer 75,000 though threats to growth in footing after having been the 70,000 40 that country come less from catalyst for many a crisis in the events in Europe and are driven past. Not only are they highly 65,000 more by internal factors such liquid and well-capitalized, 60,000 30 as a possible overheating of the but they have a stable funding 55,000 real estate and credit markets, base. 50,000 20 say analysts. “Banks by and large If China and other countries’ are now funding 100% of 45,000 appetite for commodities wane their loan books with stable 40,000 10 on the back of a slowdown deposits,” says Bladex’s Rivera. 35,000 in global growth this would “So from that perspective the 30,000 0 unwind some of the terms of health of LatAm banks is not Mar-2011 Apr-2011 Jun-2011 Jul-2011 Sep-2011 trade gains that have supported going to be impacted by what consumption and investment in is happening in Europe.” Source: BM&FBovespa, Bolsa Mexicana de Valores, CBOE the region, Chang says. In some countries such as Furthermore, LatAm’s trade Mexico, the banking system dynamics may not be as strong as they remains a potential vehicle for growth, through the financial channel things in first appear. Imports are on the rise, and largely thanks to where it stands in the EM might start to suffer,” Carstens adds. price effects explain more than 50% of credit cycle. It is neither cooling off from The broad presence of European increases in exports, says Kulesz. “When an overheated credit expansion such as banks, which Fitch says make up you have that kind of structure, you are in Brazil, nor is its banking system in the between 10%-20% of assets in Latin on weaker footing if the situation turns process of cleaning up balance sheets and America’s local banking system, could around,” he adds. strengthening its capital base. in theory act as Trojan horse for Latin That said, Kulesz says his shop “We are not in either extreme,” says American economies. But, in reality, such does not forecast significant changes Carstens. “So I think our banking system subsidiaries lack the strong funding links in commodity prices ahead. Crude oil, has the capacity to increase lending and with parent institutions that are seen in

16 LatinFinance

November/December 2011



Latin Finance - November/December 2011

Table of Contents for the Digital Edition of Latin Finance - November/December 2011

Latin Finance - November/December 2011
Contents
Contagion Risk
Mexican Credit
China Investment
Loan Markets
Mexico Banks
Sub-Sovereign Debt
Banks of the Year 2011
Argentina Investor Report
Reversal of Fortunes
Latin Finance - November/December 2011 - Latin Finance - November/December 2011
Latin Finance - November/December 2011 - Cover2
Latin Finance - November/December 2011 - Contents
Latin Finance - November/December 2011 - 2
Latin Finance - November/December 2011 - 3
Latin Finance - November/December 2011 - 4
Latin Finance - November/December 2011 - 5
Latin Finance - November/December 2011 - 6
Latin Finance - November/December 2011 - 7
Latin Finance - November/December 2011 - 8
Latin Finance - November/December 2011 - 9
Latin Finance - November/December 2011 - 10
Latin Finance - November/December 2011 - 11
Latin Finance - November/December 2011 - Contagion Risk
Latin Finance - November/December 2011 - 13
Latin Finance - November/December 2011 - 14
Latin Finance - November/December 2011 - 15
Latin Finance - November/December 2011 - 16
Latin Finance - November/December 2011 - 17
Latin Finance - November/December 2011 - 18
Latin Finance - November/December 2011 - 19
Latin Finance - November/December 2011 - 20
Latin Finance - November/December 2011 - 21
Latin Finance - November/December 2011 - Mexican Credit
Latin Finance - November/December 2011 - 23
Latin Finance - November/December 2011 - 24
Latin Finance - November/December 2011 - 25
Latin Finance - November/December 2011 - China Investment
Latin Finance - November/December 2011 - 27
Latin Finance - November/December 2011 - 28
Latin Finance - November/December 2011 - 29
Latin Finance - November/December 2011 - Loan Markets
Latin Finance - November/December 2011 - 31
Latin Finance - November/December 2011 - 32
Latin Finance - November/December 2011 - 33
Latin Finance - November/December 2011 - Mexico Banks
Latin Finance - November/December 2011 - 35
Latin Finance - November/December 2011 - Sub-Sovereign Debt
Latin Finance - November/December 2011 - 37
Latin Finance - November/December 2011 - Banks of the Year 2011
Latin Finance - November/December 2011 - 39
Latin Finance - November/December 2011 - 40
Latin Finance - November/December 2011 - 41
Latin Finance - November/December 2011 - 42
Latin Finance - November/December 2011 - 43
Latin Finance - November/December 2011 - 44
Latin Finance - November/December 2011 - 45
Latin Finance - November/December 2011 - 46
Latin Finance - November/December 2011 - 47
Latin Finance - November/December 2011 - 48
Latin Finance - November/December 2011 - 49
Latin Finance - November/December 2011 - 50
Latin Finance - November/December 2011 - 51
Latin Finance - November/December 2011 - 52
Latin Finance - November/December 2011 - 53
Latin Finance - November/December 2011 - 54
Latin Finance - November/December 2011 - 55
Latin Finance - November/December 2011 - 56
Latin Finance - November/December 2011 - 57
Latin Finance - November/December 2011 - 58
Latin Finance - November/December 2011 - 59
Latin Finance - November/December 2011 - 60
Latin Finance - November/December 2011 - Argentina Investor Report
Latin Finance - November/December 2011 - 62
Latin Finance - November/December 2011 - 63
Latin Finance - November/December 2011 - Reversal of Fortunes
Latin Finance - November/December 2011 - Cover3
Latin Finance - November/December 2011 - Cover4
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