FINANCIAL SERVICES ADVISOR a PUBLICATION of the DIALOGUE May 23-June 5, 2019
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LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org May 23-June 5, 2019 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, BANKING Banco de Ahorro y Crédito Unión What Factors Are Santander Hiring Pablo Barahona President & COO, New Tech Staff Global Retail Markets West, Liberty Mutual Group Driving Mexico’s for Brazil Unit Felipe Carvallo Spain’s Banco Santander is hiring Vice President - Analyst 400 new technology staff employ- Latin America Banking Insurance Sector? Moody’s Investors Service ees in Brazil. The move is part of the bank’s $2 billion investment Richard Child plan to boost digital operations. CEO, Mattrix Group Page 2 Michael Diaz Jr. Partner, REMITTANCES Diaz, Reus & Targ Ernesto Fernández Holmann Remittances to Chairman of the Board, El Salvador Hit Ayucus Rich Fogarty $1.78 Bn for Year Managing Director, Through April Alvarez and Marsal The amount of money transfers Desiree Green Insurance companies have significant opportunities for growth in Mexico, ratings agency A.M. to the Central American country Vice President, Best said in early May. // File Photo: Pictures of Money via Creative Commons. International Government Affairs, rose 3.9 percent year-on-year, the Prudential Financial central bank said. El Salvador’s Earl Jarrett Mexico continues offering insurance companies significant remittances predominantly come Chief Executive Officer, opportunities for growth, ratings agency A.M. Best said in from the United States. The Jamaica National Group Page 3 a report released May 6. The introduction of the Solvency Thomas Morante Chair, Insurance Regulatory & Q II-based regulatory framework in the country’s insurance in- BANKING Transactional Practice Group dustry has not become a limiting factor for the sector, the report added. Kaufman, Dolowich & Voluck What are the major drivers of growth in Mexico’s insurance sector? What Caixa Offering Manuel Orozco Director, effects is Solvency II having on insurers operating in the country? What Discounts for Migration, Remittances & Development, Delinquent Inter-American Dialogue headwinds could Mexico’s insurance sector face in the future? Adalberto Palma-Gomez Loan Payoffs Senior Partner, Manuel S. Escobedo, president of the Mexican Association Brazilian state-owned lender Caixa Proxy, Gobernanza Corporativa Econômica Federal will offer of Insurance Companies (AMIS): “In any industry, financial Rodolfo Pittaluga borrowers discounts to pay off Adjunct Professor, stability is fundamental for growth. Mexico has enjoyed this delinquent loans, said CEO Pedro Florida International University Guimarães. College of Law for almost 25 years, and although GDP hasn’t grown signifi- A Page 2 Fabian Saide cantly, it has maintained a positive stable trend most quarters. The public Founder, CEO and President, sector is very important and represents about one-fifth of Mexico’s insur- Paykii ance market. With the state as the last-level guarantor and as a public risk Jan Smith Partner, manager, it has a fundamental role in the development and penetration of KoreFusion the sector. The insurance sector has been working with the Finance Min- Roberto Teixeira da Costa Founder & Board Member Emeritus istry to propose a risk-management public policy within the framework CEBRI of article 4 of the agreement with the IMF. Once this policy materializes, Mario Trujillo it will be invaluable to align, coordinate and structure risk management CEO, DolEx Dollar Express work of all areas of government and the interaction between government and the private sector. We trust that the effect will be to enhance the efficiency of risk management in the country and, in this context, promote the penetration of insurance. The last effect of Solvency II (SII) must be to empower companies to manage their risk in a self-regulated manner. Guimarães // File Photo: Caixa Econômica Federal. Continued on page 3 COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 1 FINANCIAL SERVICES ADVISOR May 23-June 5, 2019 BANKING NEWS quisitions which, from our standpoint, generat- NEWS BRIEFS ed the miss,” Barclays analyst John Aiken said Scotiabank Misses in a note. Canada’s two largest lenders, Royal Brazilian Prosecutors Bank of Canada and Toronto-Dominion Bank, Consider Civil Suit also recently reported jumps in provisions. Analysts Estimates Against Banco Bradesco for Quarterly Profit Santander to Hire Brazilian prosecutors are considering a civil lawsuit against Banco Bradesco as they sus- Toronto-based Bank of Nova Scotia missed an- New Tech Staff pect it failed to prevent corruption schemes, alysts’ profit estimates for its second quarter, Valor Econômico reported May 30. Prosecutors which ended in April, due to surging noninterest for Brazil Unit have asked a court for an arrest warrant for expenses and higher provisions for bad loans, two Bradesco bank managers in connection to Reuters reported May 28. Scotiabank, Canada’s Spain’s Banco Santander has announced an alleged scheme involving shell companies, third-largest lender, has the biggest overseas that it plans to hire 400 new technology staff fraudulent checks and bank slips that helped presence among the country’s major banks and members for its Brazil unit, ZDNet reported launder nearly 1 billion reais ($252 million). has been focusing on Latin American units, in- June 3. The announcement is part of the Prosecutor Eduardo El Hage said Bradesco bank’s $2 billion investment plan to boost its should have noticed such financial transac- digital operations in its markets around the tions. Scotia’s earnings were world, the technology news website reported. negatively affected Santander’s operations in Brazil account for by provisions related 30 percent of that investment, the bank said. Brazil’s Caixa to Offer to acquisitions which, Santander is planning to hire Java, Android and from our standpoint, iOS developers, as well as artificial intelligence Borrowers Discounts to generated the miss.” and data engineers. The bank is seeking to Pay Off Delinquent Loans hire new technology employees for positions — John Aiken Brazilian state-owned lender Caixa Econômi- ranging from entry-level to management jobs, ca Federal will give discounts of between most of which will be located in São Paulo at a 40 percent and 90 percent to indebted retail cluding Mexico, Peru, Chile and Colombia. The Santander campus known as “Digital Genera- clients on their delinquent loans, CEO Pedro bank reported adjusted net profit attributable tion.” The bank launched the campus last year Guimarães told reporters on May 21, Reuters to shareholders of 2.08 billion Canadian dollars as a central location for its technology staff. reported. The move seeks to raise as much ($1.55 billion), or 1.70 Canadian dollars per as 4 billion reais, or roughly $990 million. share. That compares to 2.06 billion Canadian Guimarães added that the measure would raise dollars, or 1.71 Canadian dollars per share a additional revenue, as such loans had already year earlier. On average for the lender’s fiscal been written off, and allow the bank to offer second quarter, analysts had expected profit new products and services to clients after they of 1.74 Canadian dollars per share. The profit pay off their loans. miss was Scotiabank’s third in a row. At the same time it reported its profits, the bank also forecast low single-digit growth in its mortgage portfolio, saying the domestic housing market Evo Payments, Chile Bci Aguiar // File Photo: LinkedIn. had experienced a slow start. Scotiabank Form Joint Venture said its adjusted noninterest expenses rose “We offer competitive pay, as well as profes- 7.7 percent year-on-year in the fiscal second sional development opportunities in a working Atlanta-based Evo Payments and Chile’s Banco quarter to about 4 billion Canadian dollars. It’s environment that is dynamic, motivating and de Crédito e Inversiones, or Bci, are forming loan-loss provisions jumped 35 percent to 722 challenging,” said Marino Aguiar, the bank’s a 10-year joint venture that will make Evo the million Canadian dollars. The rise in provisions technology executive director. The move to first international merchant acquirer to enter followed recent acquisitions by the bank, which more digital offerings has been a major focus the South American country through partnering included Canadian insurance provider MD of Brazilian banks. Mobile banking in the South with a national financial institution. Chile’s Financial Management and the Jarislowsky American country increased 24 percent last payments market was established with the Fraser investment firm. “Scotia’s earnings were year as compared to the year before, accord- creation of one acquiring and issuing proces- negatively affected by provisions related to ac- ing to a study that Deloitte carried out for the sor, Transbank. Chilean regulators recently an- nounced legislation that will open the market. COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 FINANCIAL SERVICES ADVISOR May 23-June 5, 2019 Brazilian Banking Federation, Febraban. Six FEATURED Q&A / Continued from page 1 of every 10 banking transactions in Brazil are carried out with a computer or a mobile device. The process is on the right track. Howev- opportunities. In addition, many Mexicans er, the learning curve is relevant. The SII lack health coverage. So, demand for private model implies a level of sophistication and health insurance is likely to increase to REMITTANCES NEWS complexity that significantly affects