LatinFinance - September/October 2015 - 54

LF: Latin America's banking markets are, compared to the
developed world, quite underbanked. That offers scope for
growth. But what do you see as the challenges to the banking
sector in Latin America and the Caribbean?
BP: You're going to have economic cycles. That's just the
nature of banking. I think that wherever we operate, if I look at
capital levels of banks in Chile, Peru, Mexico, Colombia, they are
very strong. When I go down to these countries, I often meet with
regulators. We pride ourselves on having good relationships with
regulators wherever we operate. But you have to live through the
down cycles as well as the up cycles.
The economies aren't growing at the clip they were two or
three years ago and [the governments] knew that wasn't sustainable for a long period of time, so they are focused on their
infrastructure spend right now. Mexico has announced a very
aggressive infrastructure program of some $500 billion, Colombia's is around $30 billion, and other countries have announced
similar types. In Peru, for example, debt to GDP is 18% - there's
nobody in the developed world with a debt to GDP level like
that. So these governments have some firepower to spend some
money on infrastructure.
They're taking the right course of action. They have to run the
economy for the long term. They have to run an economy that
will have its ups and downs. They've been prudent and the lessons learnt from the LatAm crisis are deeply embedded in their
thought and how they operate their economies.
I don't have any grave concerns about the banking systems in
those countries today. I think people are being responsible, banks
are being thoughtful in terms of how they run their businesses
and there's lots of lessons learnt about what happened seven or
eight years ago globally.
LF: What do you think will be the keys to growth, particularly organic growth of the banking sectors in these countries?
BP: The countries have to focus on attracting FDI, making sure
the infrastructure programs are well executed and the world
takes notice and they attract capital from outside their own
countries. A lot of Canadian pension funds that are big by global
standards are investors in each of these countries, as are other
pension funds. That's important: the attraction of FDI is critically
important. And that the governments stay focused on economic
growth. Nothing creates jobs or deals with income disparity like
economic growth over the long term. Education also is a big
equalizer. That's what's critically important.
LF: So for the banking sector to mature, what would be the
steps you would expect to see that perhaps we've seen in the
developed world?
BP: In terms of product development, in a lot of these countries, banks have the ability to leapfrog. Colombia has 45 million people and 50 million cellphones. And growth of the most
advanced technology in terms of cellphone usage has gone up
dramatically, 30% year over year. That's why we're focused in
the payments space, we're focused on cybersecurity and we're
focused on data. Our customers are going to want to use these
technologies.
Also the fact that the customers don't know what they want.
We've got to think about what customers may want three years
from now, or five years from now in terms of technology. And
that's what makes things exciting. LF

54 L ATINFINA NCE.COM - September/October 2015

PORTER: Playing a long game in LatAm

BRIAN PORTER, SCOTIABANK

"WHEN YOU LOOK AT THE PACIFIC
ALLIANCE COUNTRIES - MEXICO,
PERU, CHILE AND COLOMBIA -
THAT'S THE SIXTH LARGEST ECONOMY IN THE WORLD. THAT'S VERY
HARD TO IGNORE"

http://www.LATINFINANCE.COM

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