LatinFinance - November/December 2016 - 28

have fallen around 25% and foreign investment has dropped around 10%. After years
of steady growth, we're now in a different
cycle. But many banks in the region are in
solid shape in terms of assets, liquidity and
return on assets.
Our banks are also seeing higher profit
margins than banks in developed economies. We're a region that has gone through
many crises over the decades and we always manage to find opportunities during
tough times. We're also a vastly different
industry today. Today, banks are better
capitalized. Imagine if this would have happened in the 1970s or the 1980s.
LF: Banks around the world are grappling with increased regulation. How
has it impacted Latin American banks?
GT: This continues to be an area that
worries us. I recently returned from Washington where I attended a discussion about
the latest proposed changes to bank capital
requirements by the Basel Committee
on Banking Supervision. The proposed
changes are put forward by the G-20 central banks, but largely drawn up by the G-7
central banks. Many of the big global banks
participate obviously. But we feel like too
often the points of view of banks in developing countries aren't taken into consideration. That's one of the reasons I was there
-- to make sure our voice is heard.
At one point during the discussion, there
was a proposal that if a company didn't
have an audited balance sheet, a bank
would need to put aside 300% to cover its
risk. 300%! So I explained to the regulators
that the reality in many of our countries is
that Latin America unfortunately still has
a large informal economy. We have lots of
small businesses. A regulation along those
lines would make it very difficult for our
banks. The reality of our economies needs
to be taken into consideration. We are
convinced that working with regulators is a
good thing, but sometimes these proposals
are drawn up with the big global banks and
developed economies in mind.
LF: Has the industry found ways to
deal with greater compliance and the
issue of de-risking?
GT: Compliance is still a big issue for us.
We have seen some of the larger banks in
the US stop extending lines to some local
banks in the region. The impact has been
particularly felt by medium-sized banks.
American regulation is very complex and
compliance can mean significant costs for

28 L ATINFINA NCE.COM - November/December 2016

LatAm banks in perspective
GDP Breakdown for Latin America, 2016
Paraguay (0.1%)
Bolivia (0.1%)

Central America (5%)

Uruguay (1%)
Ecuador (2%)
Peru (4%)
Venezuela (4%)
Chile (5%)

Brazil (40%)

Colombia (7%)

Argentina (9%)

Mexico (23%)

Latin American banking assets in 2016
Bolivia (0.7%)
Uruguay (1.5%)
Ecuador (0.7%)
Peru (2.0%)
Venezuela (2.5%)

Paraguay (0.4%)
Central America (4.8%)

Chile (6.3%)
Colombia (4.4%)
Argentina (2.8%)

Mexico (11.1%)

Brazil (62.8%)

Source: IMF, LatinFinance

The banking
climate of Latin
America remains
disproportionately
related to the size
of each economy.
Brazil remains the
powerhouse, but
countries like Chile
have market shares
that outweigh the
size of their

economies. Others,
such as Argentina, have relatively
weaker banking
sectors and rely on
foreign credit. What
is seen is that Brazilian banks dominate
the region - and
by all accounts
there is room for
expansion.

our banks. Banks in some countries say
they must contend with more paperwork
than others. So Felaban is putting together
a poll of 19 countries in our region to better
understand what kind of information banks
are being asked to provide. We want to try
to identify what the differences are between
what's being asked of banks in different
countries. We'd like the process to be simplified and the costs lowered.
LF: Over the last few years, we've
seen some large global banks retreat
from the region for a variety of reasons.
What are the implications for the industry?
GT: It's both good and bad. It means risk
and opportunity. On the one hand, it's a risk
Brazil (40%)
because competition is a good thing. Having
strong and aggressive foreign banks helps
to strengthen our markets. But you also run
the risk of ending up with markets being
dominated by just a few players. It could
pose a challenge for smaller banks.
LF: Does that mean we may see some
smaller banks being acquired by bigger
banks?
GT: Possibly. For some, it might be a
good option.
LF: Technology is changing banking.
Are Latin American banks moving fast
enough on this front?
GT: The big banks are. Mid- and smaller
sized banks don't have the same resources
and capacity obviously. But incorporating
technology and innovation is clearly one
of our industry's leading challenges. And
we've seen some real creativity with banks
adopting new technology. Banks in the
region have to join the digital revolution or
they run the risk of being left behind.
LF: What's your outlook for the
industry in 2017?
GT: I think the tide will turn next year.
Despite Brazil's political and economic
challenges, many Brazilian banks are well
capitalized and generating profits. If you
look at the big economies - Brazil, Argentina and Mexico - there are reasons to be
optimistic. Brazil is showing signs it could
be finally pulling itself out its downturn.
Argentina looks poised for growth next
year. Peru should continue to grow, Chile
too. Colombia, where the banking sector
has contributed significantly to growth over
the last year, also should have a healthy
economy. Overall I'm optimistic. LF


http://www.LATINFINANCE.COM

Table of Contents for the Digital Edition of LatinFinance - November/December 2016

Contents
LatinFinance - November/December 2016 - Cover1
LatinFinance - November/December 2016 - Cover2
LatinFinance - November/December 2016 - Contents
LatinFinance - November/December 2016 - 2
LatinFinance - November/December 2016 - 3
LatinFinance - November/December 2016 - 4
LatinFinance - November/December 2016 - 5
LatinFinance - November/December 2016 - 6
LatinFinance - November/December 2016 - 7
LatinFinance - November/December 2016 - 8
LatinFinance - November/December 2016 - 9
LatinFinance - November/December 2016 - 10
LatinFinance - November/December 2016 - 11
LatinFinance - November/December 2016 - 12
LatinFinance - November/December 2016 - 13
LatinFinance - November/December 2016 - 14
LatinFinance - November/December 2016 - 15
LatinFinance - November/December 2016 - 16
LatinFinance - November/December 2016 - 17
LatinFinance - November/December 2016 - 18
LatinFinance - November/December 2016 - 19
LatinFinance - November/December 2016 - 20
LatinFinance - November/December 2016 - 21
LatinFinance - November/December 2016 - 22
LatinFinance - November/December 2016 - 23
LatinFinance - November/December 2016 - 24
LatinFinance - November/December 2016 - 25
LatinFinance - November/December 2016 - 26
LatinFinance - November/December 2016 - 27
LatinFinance - November/December 2016 - 28
LatinFinance - November/December 2016 - 29
LatinFinance - November/December 2016 - 30
LatinFinance - November/December 2016 - 31
LatinFinance - November/December 2016 - 32
LatinFinance - November/December 2016 - 33
LatinFinance - November/December 2016 - 34
LatinFinance - November/December 2016 - 35
LatinFinance - November/December 2016 - 36
LatinFinance - November/December 2016 - 37
LatinFinance - November/December 2016 - 38
LatinFinance - November/December 2016 - 39
LatinFinance - November/December 2016 - 40
LatinFinance - November/December 2016 - 41
LatinFinance - November/December 2016 - 42
LatinFinance - November/December 2016 - 43
LatinFinance - November/December 2016 - 44
LatinFinance - November/December 2016 - 45
LatinFinance - November/December 2016 - 46
LatinFinance - November/December 2016 - 47
LatinFinance - November/December 2016 - 48
LatinFinance - November/December 2016 - 49
LatinFinance - November/December 2016 - 50
LatinFinance - November/December 2016 - 51
LatinFinance - November/December 2016 - 52
LatinFinance - November/December 2016 - Cover3
LatinFinance - November/December 2016 - Cover4
https://www.nxtbook.com/nxtbooks/latinfinance/0319QMR
https://www.nxtbook.com/nxtbooks/latinfinance/1218JYM
https://www.nxtbook.com/nxtbooks/latinfinance/paraguay_2018
https://www.nxtbook.com/nxtbooks/latinfinance/8320YTM
https://www.nxtbook.com/nxtbooks/latinfinance/8465TBM
https://www.nxtbook.com/nxtbooks/latinfinance/1476YBW
https://www.nxtbook.com/nxtbooks/latinfinance/7835THM
https://www.nxtbook.com/nxtbooks/latinfinance/8655TGL
https://www.nxtbook.com/nxtbooks/latinfinance/0614IJP
https://www.nxtbook.com/nxtbooks/latinfinance/ecuador_20170910
https://www.nxtbook.com/nxtbooks/latinfinance/2713KNP
https://www.nxtbook.com/nxtbooks/latinfinance/4982CFT
https://www.nxtbook.com/nxtbooks/latinfinance/7803HWE
https://www.nxtbook.com/nxtbooks/latinfinance/3829THA
https://www.nxtbook.com/nxtbooks/latinfinance/7891MDD
https://www.nxtbook.com/nxtbooks/latinfinance/7714JCR
https://www.nxtbook.com/nxtbooks/latinfinance/5619CMK
https://www.nxtbook.com/nxtbooks/latinfinance/6939ASL
https://www.nxtbook.com/nxtbooks/latinfinance/1364ASF
https://www.nxtbook.com/nxtbooks/latinfinance/0453DAS
https://www.nxtbook.com/nxtbooks/latinfinance/0453DAS_supp
https://www.nxtbook.com/nxtbooks/latinfinance/1304APV
https://www.nxtbook.com/nxtbooks/latinfinance/7234GSD
https://www.nxtbook.com/nxtbooks/latinfinance/1643XGS
https://www.nxtbook.com/nxtbooks/latinfinance/9511JKM_supp
https://www.nxtbook.com/nxtbooks/latinfinance/9511JKM
https://www.nxtbook.com/nxtbooks/latinfinance/8745TNV
https://www.nxtbook.com/nxtbooks/latinfinance/3629PBC
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC_HSBC
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC_supp
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC
https://www.nxtbook.com/nxtbooks/latinfinance/9463RVB
https://www.nxtbook.com/nxtbooks/latinfinance/7345GPY
https://www.nxtbook.com/nxtbooks/latinfinance/6398TVB
https://www.nxtbook.com/nxtbooks/latinfinance/4899EXM_supp
https://www.nxtbook.com/nxtbooks/latinfinance/4899EXM
https://www.nxtbook.com/nxtbooks/latinfinance/3885CWS
https://www.nxtbook.com/nxtbooks/latinfinance/45923GBC
https://www.nxtbook.com/nxtbooks/latinfinance/67449NBD
https://www.nxtbook.com/nxtbooks/latinfinance/46733NLP
https://www.nxtbook.com/nxtbooks/latinfinance/78456HCL
https://www.nxtbook.com/nxtbooks/latinfinance/89456RBM
https://www.nxtbook.com/nxtbooks/latinfinance/22278HBL
https://www.nxtbook.com/nxtbooks/latinfinance/2895YBM
https://www.nxtbook.com/nxtbooks/latinfinance/9033TBM
https://www.nxtbook.com/nxtbooks/latinfinance/8934TNP
https://www.nxtbook.com/nxtbooks/latinfinance/costarica20130304
https://www.nxtbook.com/nxtbooks/latinfinance/4672PNB
https://www.nxtbook.com/nxtbooks/latinfinance/9377BKL
https://www.nxtbook.com/nxtbooks/latinfinance/drmtest
https://www.nxtbook.com/nxtbooks/latinfinance/drmtest2
https://www.nxtbook.com/nxtbooks/latinfinance/5532LMC
https://www.nxtbook.com/nxtbooks/latinfinance/9044TBM
https://www.nxtbook.com/nxtbooks/latinfinance/4877RBC
https://www.nxtbook.com/nxtbooks/latinfinance/3008JHV
https://www.nxtbook.com/nxtbooks/latinfinance/3728YBC
https://www.nxtbook.com/nxtbooks/latinfinance/9337KLM
https://www.nxtbook.com/nxtbooks/latinfinance/5674GNJ
https://www.nxtbook.com/nxtbooks/latinfinance/8330KMC
https://www.nxtbook.com/nxtbooks/latinfinance/7663HCM
https://www.nxtbook.com/nxtbooks/latinfinance/2319ZMB
https://www.nxtbook.com/nxtbooks/latinfinance/7110MKL
https://www.nxtbook.com/nxtbooks/latinfinance/8599FHG
https://www.nxtbook.com/nxtbooks/latinfinance/4517HJK
https://www.nxtbook.com/nxtbooks/latinfinance/7813GHB
https://www.nxtbook.com/nxtbooks/latinfinance/1564FBM
https://www.nxtbook.com/nxtbooks/latinfinance/8884HGV
https://www.nxtbook.com/nxtbooks/latinfinance/7863SVB
https://www.nxtbook.com/nxtbooks/latinfinance/5233SFB
https://www.nxtbook.com/nxtbooks/latinfinance/5899SML
https://www.nxtbook.com/nxtbooks/latinfinance/4311PMN
https://www.nxtbook.com/nxtbooks/latinfinance/1366FBB
https://www.nxtbook.com/nxtbooks/latinfinance/9355AXC
https://www.nxtbook.com/nxtbooks/latinfinance/8559EBN
https://www.nxtbook.com/nxtbooks/latinfinance/8244QXC
https://www.nxtbook.com/nxtbooks/latinfinance/1779BBN
https://www.nxtbook.com/nxtbooks/latinfinance/7144XVB
https://www.nxtbook.com/nxtbooks/latinfinance/8971QGH
https://www.nxtbook.com/nxtbooks/latinfinance/200805
https://www.nxtbook.com/nxtbooks/latinfinance/200804
https://www.nxtbook.com/nxtbooks/latinfinance/200803
https://www.nxtbookmedia.com