LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org July 1-14, 2021 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, REMITTANCES Banco de Ahorro y Crédito Unión Should Mexican Remittances to Pablo Barahona President & COO, Mexico Hit Record Global Retail Markets West, Liberty Mutual Group Banks Avoid Use of $4.5 Billion in May Felipe Carvallo The amount of money Mexicans Vice President - Analyst abroad sent back home hit $4.5 Latin America Banking Cryptocurrencies? Moody’s Investors Service billion in May, a record level, the country’s central bank said. Richard Child Page 2 CEO, Mattrix Group Michael Diaz Jr. DIGITAL CURRENCIES Partner, Diaz, Reus & Targ SoftBank Invests Ernesto Fernández Holmann $200 Million in Chairman of the Board, Ayucus Mercado Bitcoin Rich Fogarty Japan’s SoftBank Group has Managing Director, invested $200 million in Mercado Alvarez and Marsal Bitcoin, which is among Latin Desiree Green Comments from Mexican billionaire Ricardo Salinas Pliego that his Banco Azteca could start America’s largest cryptocur- Vice President, using Bitcoin led Mexican financial authorities to warn against the practice. // File Photo: rency exchanges, the executive International Government Affairs, Facebook Page of Ricardo Salinas Pliego. chairman of the platform’s parent Prudential Financial company announced. Mexico’s central bank, finance ministry and financial sector Laura Güemes Cambras Page 4 Transactions Attorney, regulator on June 28 warned that cryptocurrency assets are Holland & Knight not legal tender in Mexico and said financial institutions op- Earl Jarrett BANKING Chief Executive Officer, Q erating with them could face sanctions. The joint statement Citigroup Sells The Jamaica National Group followed remarks by billionaire Ricardo Salinas Pliego, who said his con- Thomas Morante glomerate’s financial unit, Banco Azteca, could start using Bitcoin. What Operations Attorney Carlton Fields incentive do banks have to start using cryptocurrencies? How justified is in Venezuela Manuel Orozco the warning from the country’s top financial officials, and what risks and Citigroup, which has operated Senior Fellow, in Venezuela for more than a opportunities do digital currencies pose to Mexico’s traditional banks? Inter-American Dialogue century, announced that it has Adalberto Palma-Gomez How would a wider use of cryptocurrencies in commercial transactions sold its operations there to Banco Senior Partner, change Mexico’s economy? Nacional de Crédito. Citi’s CEO Proxy, Gobernanza Corporativa for Latin America, Ernesto Torres Rodolfo Pittaluga Cantú, said the bank will “maintain Adjunct Professor, Tapen Sinha, professor of risk management at the Instituto a strong presence” in the region. Florida International University Page 2 College of Law Tecnológico Autónomo de México and professor at the Fabian Saide University of Nottingham Business School: “In the United Founder, CEO and President, States, there is movement among some banks toward the Paykii A use of Bitcoin and other cryptocurrencies. However, the Bank of Interna- Roberto Teixeira da Costa Founder & Board Member Emeritus tional Settlements (BIS) declared that ‘it is clear that cryptocurrencies CEBRI are speculative assets rather than money.’ Curiously, the current general Mario Trujillo CEO, manager of the BIS happens to be Agustín Carstens, the former president DolEx Dollar Express of the Bank of Mexico. The BIS noted that cryptocurrencies are often used to facilitate money laundering, ransomware attacks and other financial crimes. In particular, Bitcoin has the dubious distinction of using energy wastefully. All of these bad features are relevant for Mexico. Bitcoin will make laundering of drug money more difficult to catch for the fiscal authorities in Mexico. Banco Azteca is a big player in remittances to Torres Cantú // File Photo: Citigroup. Continued on page 3 COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 1 FINANCIAL SERVICES ADVISOR July 1-14, 2021 BANKING NEWS said the operations of Banco Azteca in Peru NEWS BRIEFS represented “a nonmaterial proportion in rela- Citi Sells Operations tion to all of Grupo Elektra’s financial business BBVA Rolling Out activities.” Elekra added that it would focus its Biometric Cards in Mexico in Venezuela to Banco efforts on the United States, Mexico and Cen- tral America, Milenio reported. in June 2019, The Mexico unit of Spanish bank BBVA is roll- Nacional de Crédito Elektra announced it had sold oll of its shares ing out new biometric payment cards as a test in the El Salvador operations of Banco Azteca. run for a global introduction of the new cards, Citigroup announced July 12 that it has agreed American Banker reported July 12. The bank is to sell its operations in Venezuela to Cara- adding biometrics to cards in Mexico, removing cas-based Banco Nacional de Crédito. The REMITTANCES NEWS account details printed on the cards and using sale has received regulatory approval and is recycled materials for 86 percent of the cards’ expected to close in coming weeks, Citi said composition. BBVA chose Mexico for testing in a statement. “Citi is committed to Latin Mexico’s Remittances the new cards because of the degree of pay- America and will maintain a strong presence in Hit Record Level, ment fraud in the country as well as Mexicans’ the region where we have operated for over a heavy reliance on cash. century and built an unmatched network,” Citi $4.5 Billion in May Latin America’s chief executive officer, Ernesto Torres Cantú, said in the statement. “We would The amount of money that Mexicans abroad Chile Reaches Deal like to thank our colleagues in Venezuela for sent back home topped $4.5 billion in May, a for Bond Listings on their dedication and exceptional performance, record monthly level, the country’s central bank as well as our clients for their partnership over announced July 1. In March of last year, remit- Euroclear Platform the years.” Citigroup has operated in Venezuela tances to Mexico surpassed $4 billion for the Chile has reached a long-awaited deal with for more than a century, the New York-based first time, and now Mexicans abroad regularly Europe’s largest securities settlement house, financial services company said. Jorge Nogu- send more than that amount back home, the Euroclear, to include the Andean nation’s eroles, the CEO of Banco Nacional de Crédito, wire service reported. The record level in May corporate bonds on the firm’s international in- or BNC, said the Venezuelan bank’s growth will followed records in March and April. May is vestor platform, Reuters reported July 2, citing benefit clients who had accounts with Citi in traditionally a strong month for remittances to Andrés Pérez, the Chilean finance ministry’s Venezuela. “BNC is committed to supporting Mexico because of Mother’s Day. So far this coordinator for international finance. Although Citi’s clients in Venezuela who will continue year, the amount of money transfers sent to Chile’s government bonds had earned so-called receiving high-quality financial services while Mexico fell below $4 billion only in January and “Euroclearability” in 2017, its addition to the benefiting from the advantages of an expand- February, which are traditionally slow months $20 billion-$25 billion domestic corporate bond ing local bank with a skilled professional team for remittances. For the first five months of this market had lagged due to government changes and a modern technological platform,” he said. year, Mexico’s remittances amounted to $19.2 and technical issues including tax treatment, billion, a 21.7 percent increase as compared to according to the report. the same period last year. If the current trend Banco Azteca, continues, Mexico could take in some $45 Elektra Close All billion in remittances this year. Only manu- facturing exports bring Mexico more foreign Brazilian Court Approves Branches in Peru income than do remittances, which surpass the Oi’s Sale of Fiber Optic country’s income from oil exports and tourism. Business to BTG Funds Banco Azteca and Grupo Elektra, both of which Mexico’s level of remittances also has set Brazilian telecommunication company Oi said are owned by Mexico’s Grupo Salinas, have records for five consecutive years, the AP re- on July 7 that a court had approved its sale of closed all of their branches in Peru, Milenio ported. The $40.6 billion that Mexicans abroad a majority stake in its fiber optic business to reported July 11. The closure of the branches sent back home last year roughly equaled the funds managed by Banco BTG Pactual, Reuters came more than seven months after Elektra, budgets of the Mexican government’s minis- reported. Oi filed for bankruptcy protection a Grupo Salinas unit that owns Banco Azteca, tries of education, health, labor, welfare and in 2016 and has been selling assets to repay said it had sold its operations in Peru to a culture combined. Approximately 98.5 percent creditors. In April, Oi agreed to a $2.5 billion group of investors “with recognized experience of Mexico’s remittances come from the United offer for a 57.9 stake in its fiber optic business and trajectory in the financial sector.” At the States, nearly all via bank transfers or wire from BTG’s funds, but other firms still had time time of the announcement on Nov. 26, Elektra transfers. Cash accounts for only about 0.7 to submit competing bids. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 FINANCIAL SERVICES ADVISOR July 1-14, 2021 percent of the country’s remittances, the wire FEATURED Q&A / Continued from page 1 service reported. Factors including a “compet- itive” dollar/peso exchange rate as well as a Mexico (along with other Central American groundbreaking innovation that is currently “deep contraction of activity and employment countries). Mr. Salinas Pliego believes that operating on a parallel universe.