LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org June 3-16, 2021 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, BANKING Banco de Ahorro y Crédito Unión How Could Leftists Cuba to Pablo Barahona President & COO, Temporarily Stop Global Retail Markets West, Liberty Mutual Group Change Chile’s Allowing U.S. Cash Felipe Carvallo Bank Deposits Vice President - Analyst Latin America Banking Pension System? Cuba’s government said it would Moody’s Investors Service temporarily stop allowing cash Richard Child bank deposits in U.S. dollars, CEO, though it said it would continue Mattrix Group allowing money transfers. Michael Diaz Jr. Page 2 Partner, Diaz, Reus & Targ FINANCIAL TECHNOLOGY Ernesto Fernández Holmann Chairman of the Board, Brazil’s Nubank Ayucus Rich Fogarty Raises $750 Mn Managing Director, in Funding Round Alvarez and Marsal Brazilian digital bank Nubank Desiree Green Protesters, including the ones pictured from 2019, for years have demanded changes to Chile’s announced it raised $750 million Vice President, pension system. The rewrite of the country’s constitution may include such changes. // File International Government Affairs, Photo: Contramet. in its latest investment round, Prudential Financial which was led by U.S. business Laura Güemes Cambras Among the major changes that could emerge from a new magnate Warren Buffett’s Berk- Transactions Attorney, constitution in Chile is a reform of the country’s pension shire Hathaway. Holland & Knight Page 2 system. The current constitution gives the private sector a Earl Jarrett Chief Executive Officer, Q central role in managing pensions for millions of Chileans. REMITTANCES The Jamaica National Group What will the relatively high number of independents and leftists elected Thomas Morante to the constitutional assembly mean for the country’s pension system? Remittance Firms Attorney Carlton Fields What are the main problems with Chile’s current pension system, and Cautious on Manuel Orozco what changes are most needed to make it function better for retirees? Digital Currencies Senior Fellow, At President Nayib Bukele’s Inter-American Dialogue What role should the private sector have in the reform process? urging, El Salvador’s Legislative Adalberto Palma-Gomez Assembly made Bitcoin a legal Senior Partner, Proxy, Gobernanza Corporativa Alfonso De Urresti, member of the Chilean Senate: “Undoubt- tender, but remittance firms are reportedly cautious about offering Rodolfo Pittaluga edly, the pension system will be one of the issues that the services in cryptocurrencies. Adjunct Professor, Constitutional Convention will discuss. The main problems Florida International University Page 2 College of Law A have more to do with the fact that it is a forced savings Fabian Saide system that has been used as a permanent source for the capital market, Founder, CEO and President, rather than simply a social security system. As socialist senators have Paykii been proposing since 2018, we believe that what is needed is a new Roberto Teixeira da Costa Founder & Board Member Emeritus mixed pension system, with an incentive to save, but framed in a social CEBRI security scheme. This would initiate a transition to a pension system Mario Trujillo CEO, transforming the current individual capitalization system into one made DolEx Dollar Express up of four pillars: a basic solidarity pillar, a collective solidarity capital- ization pillar, an individual capitalization pillar and a voluntary savings pillar, all with intergenerational solidarity. The political conformation of the Constitutional Convention should not be a problem for the substantive discussion that allows moving toward a new system, which will undoubt- edly have a state component, in which it is feasible to contemplate some Bukele // File Photo: Salvadoran Government. Continued on page 3 COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 1 FINANCIAL SERVICES ADVISOR June 3-16, 2021 BANKING NEWS FINANCIAL TECHNOLOGY NEWS NEWS BRIEFS Cuba to Temporarily Brazil’s Nubank Brazil’s BTG Pactual Acquires Minority Stop Allowing U.S. Raises $750 Million Stake in Perfin Cash Bank Deposits in Latest Round Brazil’s Banco BTG Pactual has acquired a minority stake in Perfin, an asset manager and The Cuban government said June 10 that it Brazilian digital bank Nubank announced June wealth management platform, Reuters reported would temporarily stop allowing cash bank 8 it raised $750 million in its latest investment June 14. Perfin has 21 billion reais ($4.11 deposits in U.S. dollars while still accepting round, led by U.S. business magnate Warren billion) under custody and is likely to enhance transfers, Reuters reported. It was unclear Buffett’s Berkshire Hathaway, Folha de S.Paulo BTG’s investment platform. BTG Pactual did how long the suspension will last, the Miami reported. Berkshire Hathaway invested $500 not disclose the size of the stake nor the Herald reported. The announcement came just million in the Brazilian fintech in the round, amount it paid for it. before Cuba’s government was due to present which was an extension of Nubank’s $400 its annual resolution to end the longtime U.S. million Series G round announced in January, Forbes reported. A second extension totaled $250 million and was led by Sands Capital, with Mastercard Temporarily several other funds including Invest, Sunley Drops Branding From Some Cuba analysts saw House Capital, CPP Investments, MSA Capital, Copa América Games the move as an attempt to Tarsadia Capital and Chinese tech company Mastercard has decided to temporarily drop its Tencent participating, as well as Brazil’s control the black-market branding from the Copa América soccer tourna- Absoluto Partners and Verde Asset Manage- price of the dollar. ment, which is taking place in Brazil, over con- ment. With both extensions, Nubank’s eighth cerns about Covid-19 in the South American fundraising round reached $1.15 billion, the country, Reuters reported. Mastercard said in largest ever raised by a technology company a statement that it decided not to “activate” its embargo on the Caribbean nation at the United in Latin America, Forbes reported. The latest sponsorship, though it remains a sponsor, as it Nations General Assembly. In announcing investments give the bank a valuation of $30 has been since 1992, the wire service reported. the move, the Cuban central bank shifted the billion, up from $25 billion at the time of its Earlier this month, the tournament’s organizers blame to U.S. sanctions, saying they restricted previous fundraising, Reuters reported, citing unexpectedly relocated the tournament to Bra- the country’s ability to use dollars abroad. “It an unnamed source familiar with the situation. zil, despite the country’s struggle with one of is ever more difficult for Cuba to find interna- That figure would make Nubank worth just the world’s worst rates of Covid-19 cases and tional banking or financing institutions willing slightly less than Banco Santander Brasil, the deaths. Co-hosts Colombia and Argentina were to receive, convert or process U.S. currency South American nation’s third-largest lender dropped because of civil unrest and a surge in in cash,” the bank said in a statement dissem- with more than 2,000 branches. The valuation Covid-19 cases, respectively. inated by state-run news media. Some Cuba also puts Nubank on par with technology analysts saw the move as an attempt to control start-ups such as California-based Robinhood the black-market price of the dollar, which has Markets and China’s Lufax, although it still lags spiraled to more than twice the official ex- Chinese company Ant Group, Reuters reported. Mexican Fintech Clip change rate since the Communist-run country Receives $250 Million began opening stores selling hard currency in Capital Investments and stopped selling dollars due to a lack of REMITTANCES NEWS cash available, Reuters reported. More than 20 Clip, a payments financial technology start-up, banks have stopped processing transactions has received $250 million in capital invest- involving Cuba since former U.S. President Remittance Firms ment from SoftBank’s Latin American Fund Donald Trump tightened sanctions on the coun- Reportedly Cautious and Viking Global Investors, Bloomberg News try, said central bank Vice President Yamile reported June 10, citing the company’s founder Berra Cires. Cuban and foreign bank account on Crypto Services and chief executive officer, Adolfo Babatz. The holders on the island will have until June 21 investments give the start-up a valuation of to deposit dollars in their accounts, the Miami Despite El Salvador’s move to make Bitcoin $2 billion, the news service reported. “We are Herald reported. a legal tender, remittance firms are being planning to grow aggressively and hire about 320 people in the next 18 months,” said Babatz. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 FINANCIAL SERVICES ADVISOR June 3-16, 2021 cautious about offering services related to FEATURED Q&A / Continued from page 1 cryptocurrencies, Reuters reported June 11. Salvadoran President Nayib Bukele has touted type of private participation, but with a to the role of private versus public providers Bitcoin’s use as a currency for remittance different framework and objectives. The fact in pensions, although the majority wants transfers to the Central American nation. that the most conservative political forces to maintain ownership of the accumulated However, just a few money-transfer companies have become more underrepresented than funds in the current system. We don’t know are dabbling in the digital currency, the wire they had expected will prevent them from the final solution to this impasse, but it is un- service reported. “For Western Union and some making a corporate defense of institutions likely to emanate from the new constitution.” of the other remittance providers keep in mind such as the AFPs and having to undertake a that most of the volume in the remittance debate that makes it possible to have a sys- Olivia S.