LATIN AMERICA ADVISOR FINANCIAL SERVICES ADVISOR A PUBLICATION OF THE DIALOGUE www.thedialogue.org March 14-27, 2019 BOARD OF ADVISORS FEATURED Q&A TOP NEWS Ernesto Armenteros Vice Chairman of the Board, INSURANCE Banco de Ahorro y Crédito Unión What Trends Are Massy United Pablo Barahona President & COO, Starts Offering Global Retail Markets West, Liberty Mutual Group Shaping Payments Insurance in Felipe Carvallo Jamaica Vice President - Analyst Latin America Banking in Latin America? The company’s entry into Jamaica Moody’s Investors Service will mean increased competition, Richard Child leading to better prices and terms CEO, for consumers, said Finance Mattrix Group Minister Nigel Clarke. Michael Diaz Jr. Page 2 Partner, Diaz, Reus & Targ MOBILE PAYMENTS Ernesto Fernández Holmann Chairman of the Board, Mexico Seeing Ayucus Rich Fogarty Interest in Mobile Managing Director, Payments System Berkeley Research Group Several companies have Desiree Green The payments sector in Latin America took a step toward consolidation with Fidelity National expressed interest in the new Vice President, Information Services’ announcement of a deal to acquire Worldpay. // File Photo: hloom.com International Government Affairs, system, said central bank chief via Flickr. Prudential Financial Alejandro Díaz de León. Earl Jarrett Fidelity National Information Services, or FIS, announced Page 3 Chief Executive Officer, March 18 that it is acquiring London-based payment The Jamaica National Group processing company Worldpay for some $35 billion in cash BANKING Thomas Morante Chair, Insurance Regulatory & Q and stock. The deal values Worldpay at approximately $43 U.S. Sanctions Transactional Practice Group billion and creates a giant global payments company. What does the deal Kaufman, Dolowich & Voluck Venezuelan between the two companies, both of which serve Latin America, mean Manuel Orozco State-Run Bank Director, for consumers in the region? How does consolidation in the payments Migration, Remittances & Development, The U.S. Treasury imposed Inter-American Dialogue sector affect banks and other businesses? What trends are shaping Latin sanctions on Venezuelan state- run bank Bandes. President Adalberto Palma-Gomez America’s payments industry, and how does the region compare to other Senior Partner, parts of the world in terms of innovation and leadership? Nicolás Maduro’s government has Proxy, Gobernanza Corporativa distorted the bank’s purpose in Rodolfo Pittaluga order to help keep him in power, Adjunct Professor, Lindsay Lehr, senior director at Americas Market Intelli- said Treasury Secretary Steven Florida International University Mnuchin. gence: “The acquisition of Worldpay speaks to the increasing College of Law Page 2 Fabian Saide consolidation of the payments industry; it is notable that— Founder, CEO and President, similar to the acquisition of Digital River World Payments Paykii A by Worldline in 2017—even already-large, global corporations are being Jan Smith Partner, acquired, and not just emerging start-ups. FIS, primarily a provider of KoreFusion financial services such as insurance and corporate payments, is clearly Roberto Teixeira da Costa Founder & Board Member Emeritus looking to round out its offering by strengthening its position in payments, CEBRI as well as increasing its international reach. Worldpay is strategically Mario Trujillo positioned in Latin America as a provider of payment services to leading CEO, DolEx Dollar Express retail, travel and digital companies, including Rappi, perhaps the region’s most exciting start-up—a Colombian on-demand delivery app that has now expanded to seven markets thanks to help from Worldpay. The acqui- sition by FIS will strengthen Worldpay’s value proposition and enable it to provide increasingly sophisticated services to its clients.” Mnuchin // File Photo: U.S. Treasury. Continued on page 6 COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 1 FINANCIAL SERVICES ADVISOR March 14-27, 2019 BANKING NEWS apply to Bandes subsidiaries, including Banco NEWS BRIEFS Bandes Uruguay. The Treasury’s statement U.S. Treasury said Maduro attempted to move more than $1 Citigroup Expects Higher billion out of Venezuela early this year through Revenues From Brazil Sanctions Venezuelan the Uruguay subsidiary. Over the past decade, the China Development Bank has provided Citigroup’s chief executive in Brazil said the State-Run Bank Bandes with billions of dollars in exchange bank expects fees from advising on public as- for oil, Reuters reported. Earlier this year, the set sales and a revival in capital markets could The U.S. Treasury on March 22 imposed sanc- United States slapped sanctions on Venezuelan bring annual revenue from $1.1 billion today to tions on Venezuelan state-run bank Banco de state oil company PDVSA and also on Vene- $1.5 billion in the coming years, Reuters report- Desarrollo Económico y Social de Venezuela, or zuelan security forces that support Maduro. ed March 18. Marcel Marangon did not cite a Bandes, and four related institutions, the Trea- Additionally, the White House revoked the timeframe, but added that Citi is also planning sury said in a statement. The sanctions were visas of top officials and relatives of Maduro’s to expand its commercial banking division in the latest move to increase pressure on Vene- government, Politico reported. [Editor’s note: the South American country, according to the zuelan President Nicolás Maduro and followed See related Q&A in the Feb. 28-March 13 issue report. Citi sold its consumer banking business of the Financial Services Advisor.] in Brazil to Itaú Unibanco in 2016. Roberto Marrero Brazil’s Bradesco Hits and other political López Obrador, Head of prisoners must be 100 Mn Interactions Mexican Bank Association released immediately.” Call for More Competition —Steven Mnuchin Through AI Platform Mexican President Andrés Manuel López Brazilian bank Bradesco has reached 100 Obrador and the leader of the country’s banking million interactions through its artificial association on March 22 said there should be government agents’ arrest last week of Roberto intelligence, or AI, platform, and it’s looking to more competition among Mexico’s banks so Marrero, the chief of staff of Venezuelan start generating revenue through the system that commissions are lowered and more peo- National Assembly President Juan Guaidó, who this year, ZDNet reported March 25. Bradesco, ple enter the formal banking system, Reuters has international recognition as the country’s the South American country’s second-larg- reported. The government is open to the idea acting president. “The regime’s continued use est private lender with more than 71 million of allowing more licenses for the creation of of kidnapping, torture, and murder of Venezue- customers, has seen the number of users in its new banks, López Obrador said at a convention lan citizens will not be tolerated by the U.S. or AI service increase four-fold since February of in Acapulco. López Obrador also said he would the international coalition that is united behind last year. Approximately 14 million customers not push for new laws to regulate the commis- President Guaidó,” U.S. Treasury Secretary use it. Bradesco launched the AI platform, sions that banks charge. Steven Mnuchin said in a statement. “Roberto Bradesco Inteligência Artificial, in 2016, but 75 Marrero and other political prisoners must be percent of the interactions through the system released immediately.” The sanctions freeze have occurred over the last 12 months, accord- any assets that Bandes or its subsidiaries have ing to the report. The service can answer text, Massy United under U.S. jurisdiction and prevent U.S. citizens chat or voice-based questions about products Insurance Starts from any dealings with the state-run bank. “The or services through the bank’s app, WhatsApp Operations in Jamaica willingness of Maduro’s inner-circle to exploit or Google Assistant. The bank is aiming to Venezuela’s institutions knows no bounds,” start generating more business through the AI Massy United Insurance has started offering Mnuchin said in the statement. “Regime insid- platform this year, introducing more complex its products in Jamaica, where it has opened a ers have transformed Bandes and its subsid- operations such as loans and investments, branch, Caribbean 360 reported March 15. The iaries into vehicles to move funds abroad in an ZDNet reported. About 90 percent of the bank’s company already has operations in 18 other attempt to prop up Maduro. Maduro and his services are already available on its app, but English- and Dutch-speaking islands in the enablers have distorted the original purpose sales made via mobile are just roughly 20-30 Caribbean. Jamaican Finance Minister Nigel of the bank, which was founded to help the percent of the bank’s overall business volume, Clarke said Massy’s entry into Jamaica’s insur- economic and social well-being of the Venezu- Forbes reported earlier this year. “It’s a low ance market will mean increased competition, elan people, as part of a desperate attempt to [percentage],” Mauricio Minas, Bradesco’s ex- leading to better prices, terms and savings for hold onto power,” he added. The sanctions also ecutive vice president, told Forbes. “We want to customers. COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 FINANCIAL SERVICES ADVISOR March 14-27, 2019 increase sales in that channel,” he said, adding that the goal is to increase mobile sales to 50 percent this year. MOBILE PAYMENTS NEWS Mexico Seeing Interest in Mobile Payments System s Several companies, including Uber, have expressed interest in using the Mexican central bank’s new mobile payments system, the head of the bank said March 22, Reuters reported. 2019 In an interview with the wire service, Alejandro Díaz de León said the bank was seeking to The SWIFT Latin American educate companies about how the program Regional Conference could be used, adding that the ride-hailing SPEAKERS Irene Arias JF Legault CEO, IDB Lab Global Head of Cybersecurity Operations, JP Morgan Cesar Cernuda Díaz de León // File Photo: Notimex.