FINANCIAL SERVICES ADVISOR a PUBLICATION of the DIALOGUE May 31-June 13, 2018
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LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org May 31-June 13, 2018 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, BANKING Banco de Ahorro y Crédito Unión What Is Driving Pablo Barahona Colombian Banks President & COO, Close Accounts of Global Retail Markets West, Liberty Mutual Group Remittance Flows Crypto Exchange Felipe Carvallo Major Colombian banks, including Vice President - Analyst Bancolombia, have closed the Latin America Banking to the Region? Moody’s Investors Service accounts of cryptocurrency exchange Buda.com. Richard Child Page 2 CEO, Mattrix Group Michael Diaz Jr. MOBILE BANKING Partner, Diaz, Reus & Targ, LLP Paraguay’s Mobile Ernesto Fernández Holmann Bank Transactions Chairman of the Board, Ayucus Total $16 Million Rich Fogarty Through April Managing Director, Berkeley Research Group Paraguayans completed nearly 4.6 million mobile banking trans- Desiree Green Remittances to Latin America and the Caribbean reached a record high last year, the World actions in the fi rst four months Vice President, Bank said. // File Photo: Pexels. International Government Affairs, of the year, according to central Prudential Financial bank data. Earl Jarrett Remittances fl owing into Latin America and the Caribbean Page 2 Chief Executive Offi cer, grew 8.7 percent in 2017, according to the World Bank, The Jamaica National Group reaching a record high of nearly $80 billion. This year, BANKING Thomas Morante Q Partner, remittances to Honduras are up more than 8 percent as of BCI Gets Approval Holland & Knight mid-May, and in the month of April alone, Mexicans working abroad sent for Acquisition Manuel Orozco home $2.72 billion, up nearly 18 percent from the same month last year Director, of TotalBank Migration, Remittances & Development, and also a record. What factors are driving the growth of remittances to Inter-American Dialogue Chile’s Banco de Crédito e Inver- Central America and Mexico? How long will the surge in money transfers siones, or BCI, received approval Adalberto Palma-Gomez to complete its acquisition of Senior Partner, last? What effects are the rise in remittances having on recipient fami- Proxy, Gobernanza Corporativa lies and local economies, and what should policymakers be considering Miami’s TotalBank. BCI’s chief executive, Eugenio Von Chrismar, Rodolfo Pittaluga more carefully in light of recent remittances trends? Adjunct Professor, said the acquisition is part of Florida International University the banks efforts at geographic College of Law diversifi cation. Manuel Orozco, member of the Financial Services Advi- Jan Smith Page 2 Partner, sor board and director of the Migration, Remittances and KoreFusion Development Program at the Inter-American Dialogue: Roberto Teixeira da Costa “Growth in remittances is being driven predominantly by Board Member, A SulAmérica migration patterns in countries such as Haiti, the Dominican Republic, Mario Trujillo Guatemala, Honduras, El Salvador and Colombia, which represent 45 CEO, DolEx Dollar Express percent of fl ows in remittances and experienced growth of more than 10 percent last year. In fact, for Central America and the Caribbean, the projected 3.5 percent economic growth for these countries is due largely to the combined 15 percent increase in remittances. Other drivers of remittance growth include the continued demand for foreign labor in the U.S. economy, and to a lesser extent, currency devaluations in countries like Mexico, the Dominican Republic and Costa Rica. The most important driver however, was migrants’ fear of being deported. We found that Von Chrismar // File Photo: BCI. Continued on page 3 COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 1 FINANCIAL SERVICES ADVISOR May 31-June 13, 2018 BANKING NEWS $20 million out of the country’s banks. [Editor’s NEWS BRIEFS note: See related Q&A in the May 3-16 edition Banco de Chile May of the Financial Services Advisor.] Paraguay Mobile Bank Transactions Total $16 Mn Have Lost Nearly Colombian Banks For Year Through April $100 Million in Attack Close Accounts of Paraguayans completed nearly 4.6 million mobile banking transactions in the fi rst four A robbery at Banco de Chile in the midst of Crypto Exchange months of this year, with a total value of more a massive computer attack last month could than $16 million, according to data released by have netted more than the $10 million that Major banks in Colombia have closed all the the central bank, Cinco Días reported on June the bank had originally estimated, América accounts of cryptocurrency exchange Buda. 1. Tigo, a subsidiary of Luxembourg-based tele- Economía reported June 11. Hackers on May com, Infobae reported June 8. Alejandro Bel- com fi rm Millicom, was far ahead of its com- 24 reportedly used a variant of the KillDisk trán, the CEO of Buda in Colombia, confi rmed petitors in the Paraguayan market, completing malware to distract the bank’s security staff that Bancolombia, BBVA and Davivienda have 89 percent of the transactions in the quarter, before shifting funds via SWIFT, a secure each recently closed his company’s accounts. followed by Buenos Aires-based Personal. Tigo Colombia’s regulatory agency that oversees founded its Paraguayan operation in 1992. fi nancial institutions earlier this year issued a statement warning of risks related to crypto- currencies, but the circular did not oblige banks Canada’s MOBI724 Enters to close the accounts of fi rms, Beltrán said. In April, banks in nearby Chile took similar actions Central America Through against cryptocurrency fi rms, including Buda. Deal With Panama Bank Colombia’s Senate has debated regulating Montreal-based MOBI724 Global Solutions, an cryptocurrencies and blockchain, with some EMV-linked payment system operator and digi- legislators highlighting potential benefi ts of the Ebensperger Orrego // File Photo: Banco de Chile. tal marketing fi rm, announced on June 5 that it technology, such as more secure voting, as well had reached an agreement with a Panamanian messaging cooperative. Bank employees as more transparent contracting procedures bank to launch its fi rst commercial operation disabled 9,000 workstations in an effort to stop and management of public services. [Editor’s in the country. The company will provide its the virus’ spread before they spotted “unusual note: See related Q&A in the April 19-May 2 “card-linked offers solution,” which offers transactions,” originally thought to amount to issue of the Financial Services Advisor.] consumers rewards for certain purchases and around $10 million worth of pesos. Unnamed allows businesses to collect commercial data. sources told La Radio that the privately held The deal marks MOBI724’s fi rst entry into the bank could have been defrauded of an amount BCI Gets Approval Central American market. close to $100 million, according to the report. for TotalBank Deal Earlier this month, Banco de Chile chief executive Eduardo Ebensperger Orrego assured Chile’s Banco de Crédito e Inversiones, or customers that none of their accounts were Banco Bradesco Signs on BCI, said June 4 that it had received approval compromised, The Register reported. The min- to complete its acquisition of Miami-based to New SWIFT Service istries of interior and fi nance have called for TotalBank, a Banco Santander subsidiary, meetings with bank regulators to discuss the Banco Bradesco has become the fi rst bank which it agreed to purchase in December for case. The chair of the Economy Committee in in Brazil to join SWIFT gpi, which stands for $528 million, Diario Financiero reported. Chile’s Chile’s Senate, Ximena Rincón, said this month global payment innovation, a service aimed central bank and the Superintendency of Banks that the country’s banking laws and oversight at improving cross-border payments, SWIFT and Financial Institutions have both approved needed an “urgent update.” Chile is not the only announced June 5. More than $100 billion a the sale, as have U.S. authorities. BCI, which country in the region with banks that have been day now fl ows over gpi, which SWIFT launched completed the deal through its subsidiary City hit by cyber thieves. Mexican banks have seen last year as “the largest change in cross-border National Bank, will close the deal later this an unprecedented level of cyberattacks this payments over the last 30 years” and “the new month, South Florida Business Journal report- year, central bank chief Alejandro Díaz de León standard.” Forty-nine of the world’s s top 50 ed. With the acquisition, BCI will become the said last month. The attacks have included in- banks have signed up to the service. SWIFT is a third-largest bank in Florida with more than $14 cidents in which thieves siphoned as much as member-owned cooperative and that provides billion in total assets. “We want to continue secure fi nancial messaging services. COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 2 FINANCIAL SERVICES ADVISOR May 31-June 13, 2018 diversifying our operations geographically and FEATURED Q&A / Continued from page 1 we want to be a relevant actor at the regional level,” said BCI Chief Executive Eugenio Von Chrismar. “For the former, we will continue to more than half of migrants, the majority of decades and embrace long-established and focus on growth in Florida, the gateway for whom were afraid of being deported, sent new policy mechanisms intended to produce investments to and from Latin America.” 25 percent more than the previous year. The a more equitable and sustainable way of life sustainability of this pattern is unlikely, due for most people.” to several factors. First, migration has been ANTI-MONEY LAUNDERING NEWS slowing down, and fewer new migrants may Mario Trujillo, member of the enter remittance-sending behavior. Second, Financial Services Advisor Mexico Sees migrants who sent those amounts used board and chairman, presi- their savings to do so.