LatinFinance - November/December 2013 - 54

54 LATINFINANCE.COM - November/December 2013

Jul-2013

Apr-2013

Jan-2013

Oct-2012

Jul-2012

Apr-2012

"A CHANGEABLE
AND UNPREDICTABLE
ECONOMIC ENVIRONMENT HAS MADE PLANNING VERY DIFFICULT"

Jan-2012

JUAN CARLOS ESCOTET, BANESCO

Oct-2011

One theme dominated Venezuela's banking
system over past year: lending expansion.
Assets of the banking sector grew nearly
60% in the year to June 2013, according
to Sudeban, the regulator. With inflation
expected to run at around 40% this year,
thanks to the government's aggressive
increase of the money supply, that balance
sheet expansion is to be expected.
Yet within that environment, some
banks stood out for also strengthening
their balance sheets. Banco Mercantil and
Banco Banesco both improved capital and
profitability over the year.
But it was Banco Banesco's ability to also
keep bad loans in check that makes it Bank of
the Year in Venezuela. Its lending expanded
faster than the rest of the system - its
balance sheet grew 71% over the year - but
at the same time, capital and profitability
also rose.
Banesco's capital ratio stood at 10.85%
at mid-year, up nearly 50 basis points from
a year earlier. Its return on equity grew 20
points, to 80.88%, while its return on assets
rose a point, to 5.97%. Meanwhile, dud loans
stayed low, at 0.7% over the year.
Indeed, Banesco's solid performance
in relation to other Venezuelan banks
prompted Fitch to upgrade the lender's long
term rating on a national scale by one notch,
to A+, in February. The agency pointed
to Banesco's strong performance despite
what it termed a "high level" of government
intervention in banking.
Still, Fitch said Banesco's impressive
profitability levels are likely to diminish this

Jul-2011

Banesco has extended its
international reach with
operations in Colombia and
Spain

Apr-2011

Banco Banesco

Shopping in Spain
Despite - or, perhaps, because of - a
tricky macroeconomic situation in its
home territory, Banesco has furthered
its international expansion. In April
2013, it opened a representative office in
Colombia, adding to an Americas portfolio
that includes operations in the Dominican
Republic, Panama and the US.
That came after it stretched much
further afield in December, when it
announced an agreement to buy 70%
of a Spanish bank. Taking advantage of
a tough run for Spain's economy and
financial system, Banesco paid €50 million
($68 million) to buy Banco Etcheverría,
a bank based in Galicia, in the country's
northwest.
Six months later, Banesco picked up a
further 66 branches from the seller - NCG
Banco, a lender that had collapsed and
been taken over by the Spanish government
in December 2012, amid the country's
overhaul of its banking sector.
"International expansion demonstrates
the bank's capacity to enter new markets,
including competitive markets like the
US, and its ability to work under different
regulations and transparency rules," says
Escotet.
With the purchases, which totalled €100
million, Banesco has 112 branches in various
parts of Spain, including Madrid, says
Escotet. It hopes to add a further eight by
the end of the year.
A listing of its Spanish operations is also a
goal, he says.
"Banesco has three main shareholders,
with the rest of the capital shared between
40,000 small shareholders," says Escotet.
"That's the model that we would like to
follow in Spain."
Banesco plans
Credit boom
to consolidate its
Loans extended by Venezuelan banks (VEB, bn)
international growth,
600
particularly cementing
its new positions in
500
Colombia and Spain,
Non-performing
400
he says. In Venezuela,
Current
the bank is tapping into
300
online opportunities
200
for growth.
Banesco has 417
100
branches, but its online
following is growing
0
- clients registered
for internet banking
increased by 6% in the
first eight months of
Superintendencia de las Instituciones del Sector Bancario (Sudeban) Venezuela
2013. LF
year. The bank recognizes this.
Juan Carlos Escotet, the bank's
chairman, tells LatinFinance that
increasing profitability has been "one of
the biggest challenges" the bank has faced
in recent times.
Since former president Hugo Chávez
died in office in March, the country's
economic management has become
increasingly unpredictable.
Nelson Merentes departed as finance
minister in October, after just six months
in the job. He was replaced by Rafael
Ramírez, until then the minister of
petroleum and mining. Meanwhile, Edmée
Betancourt, who took over from Merentes
as head of the central bank in April, was
herself replaced in August by Eudomar
Tovar.
"Given the very short tenure of the
persons designated to those positions, it is
very hard to understand how the decisionmaking process inside the government is
taking place," analysts at Barclays said in
August.
Management of foreign exchange
controls have struggled: two systems to
control the supply of dollars have already
been tried and discarded in 2013.
"It has been a big challenge to [maintain
profitability] while complying with the full
regulatory framework and with the risk
standards that we have defined internally
- and all of this in a changeable and
unpredictable economic environment,
which has made planning very difficult,"
says Escotet.
In response, the bank has tried to
operate in a way that allows it to adapt
swiftly, he says.

Jan-2011

BANK OF THE YEAR VENEZUELA


http://www.LATINFINANCE.COM

LatinFinance - November/December 2013

Table of Contents for the Digital Edition of LatinFinance - November/December 2013

Contents
LatinFinance - November/December 2013 - Cover1
LatinFinance - November/December 2013 - Cover2
LatinFinance - November/December 2013 - Contents
LatinFinance - November/December 2013 - 2
LatinFinance - November/December 2013 - 3
LatinFinance - November/December 2013 - 4
LatinFinance - November/December 2013 - 5
LatinFinance - November/December 2013 - 6
LatinFinance - November/December 2013 - 7
LatinFinance - November/December 2013 - 8
LatinFinance - November/December 2013 - 9
LatinFinance - November/December 2013 - 10
LatinFinance - November/December 2013 - 11
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LatinFinance - November/December 2013 - Cover3
LatinFinance - November/December 2013 - Cover4
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