The wisdom of spending $10 billion buying Latin America banks has
not always been crystal clear to analysts but the results are
starting to come through. In the first quarter, BSCH's Latin
American banks earned nearly $200 million, 69% up on the first
quarter of 1999, and roughly 40% of the total. By contrast Spanish
retail banking managed a meagre 4% increase in profits.
On a medium-term basis Latin America is expected to contribute
closer to 30% of the total and part of the logic of merging with
BCH is to reduce the proportion of these earnings. As Santander
discovered in 1998, Latin volatility can have a considerable impact
on the parent company's share price.
Right now, however, the bank is benefiting from a benign outcome:
growth prospects in most Latin countries have improved and BSCH has
had several years to put its purchases in order. This has involved
considerable writing oV of...
