BBVA South America (all BBVA’s Latin American operations excluding Mexico) earned profits for the global bank of €1.347 billion, up 23.6% on the previous year. Attributable profit from the bank’s south American business grew in all countries except for Panama (-4%) and Paraguay (-40%). All other countries grew, with double-digit attributable profit growth in Peru (12%), Colombia (19%), Argentina (42%), Venezuela (51%) and Uruguay (197%). BBVA Bancomer in Mexico also performed well, increasing revenues by 10.1% and operating profit by 2.2% to Ps28.1 billion ($2.1 billion). Credit Suisse takes the hotly disputed award for best investment bank in the region. BTG Pactual made a strong claim to be the first local bank to take this award, but its revenues are still a little too Brazil-focused to claim Latin American leadership. There were also strong all-rounder claims, with Bank of America Merrill Lynch the only bank to take a top-five position in the ECM, DCM and M&A league tables. However, its lack of leadership in any single sector possibly makes it more sensitive to market volatility – the bank is outside the top five for investment fees. BAML has a strong and broad Latin America base, however, and is a bank to watch in the coming year, as is Citi, which had a strong year and came close in many categories beyond those it won – both regionally and nationally this year – by successfully leveraging its unsurpassed physical presence to win market share and serving as bookrunner on many of the region’s landmark transactions. JPMorgan also has a strong Latin America franchise and continues to be active. However, ultimately the award for excellence goes to the Swiss bank. Not only is it the clear leader in M&A and one of the market leaders in ECM, but its DCM business is a serious contender in the areas in which it chooses to compete. The bank focuses on the higher-value work for high-yield issuers, first-time issuers and sole lead mandates. Credit Suisse is ranked fourth – based on fees – in bringing high-yield DCM transactions. During the qualification period the bank executed 22 transactions worth $19.6 billion. The bank was sole lead on five transactions and executed transactions for six issuers’ first forays into the international debt capital markets, which often requires superior structuring, distribution and execution capabilities. Credit Suisse demonstrated this excellence in DCM for Nemak, USJ, Colombia Telecomunicaciones, Banco Davivienda, Inmet and Bladex. Investment banks in Latin America generated fees roughly equivalent to $2 billion from their core bookrunner/adviser services, growing 7.3% in the past year. However, some markets (for example, Brazilian ECM) were quiet and others (regional DCM) remained strong. Brazil is still the largest market, but activity has been growing faster elsewhere: the largest fee-income growth was in Mexico, Peru and Colombia. This trend has helped the US and European investment banks sustain revenues as they are not – as yet – facing the same fierce level of local competition in these markets as in Brazil. However, that is changing. Not only are the locals in Colombia, Peru and Chile growing quickly in their domestic markets, they are also looking to grow in this Andean region. The Brazilians are also increasingly keen to present themselves as Latin American banks, diversifying revenue streams and being able to sell the ‘ex-Brazil’ investment story when, as is the case now, Brazil’s sheen starts to lose some of its lustre. BTG Pactual is the leader to date: its acquisition of Celfin in Chile, and to a lesser extent Bolsa y Renta in Colombia, provide a presence that fits with the diversification theme. The bank topped the Latin America table for investment banking, booking revenues of $195 million – equivalent to a market share of 10.1% – according to data provider Dealogic.
BTG Pactual book-managed a wide array of transaction types, comprising IPOs, follow-ons, rights offerings, accelerated bookbuilds and real estate funds. The bank was global coordinator on the largest transaction in the period: Enersis’s highly successful and complex $6 billion capital raising. It was also the first non-US bank to sole-manage an American depositary receipts offering, when it executed CorpBanca’s $158 million follow-on. The bank also defended its leading position in its home market of Brazil and was bookrunner on the two largest deals in that market, with its own IPO (a Euromoney deal of the year for its structuring and execution) and Taesa’s $867 million ‘re-IPO’. It also introduced a new equity product to the market with its FII BTG Pactual Corporate Office Fund. Amid the stranglehold of the Brazilians in their home market, HSBC claimed the best debt house for Brazil award and it also wins best regional debt house. This category was tight: with Citi dominating in volume and Deutsche Bank challenging in a range of DCM products. But HSBC won because of its ability to demonstrate both breadth and depth. The bank can also point to repeat business from key clients – such as the Republic of Chile’s $1.5 billion dual-tranche transaction. HSBC is the only bank to have been mandated by the sovereign three consecutive times, and Chile is leading the region in its international benchmark transactions. This transaction also highlights HSBC’s development of the dual-tranche issue structure (either five and 10 years or 10 and 30 years). The bank led more of these transactions than any other and added a demonstrable benefit to clients in creating demand tension between the different tranches, resulting in tighter pricing for the issuer and redefining issuers’ credit curves. HSBC also has access to a wide range of alternative pools of liquidity for Latin America issuers, which might become increasingly important in the coming year. HSBC was the only bank to have led international transactions in Australian dollars (Pemex’s A$150 million – $138 million, a first-ever transaction in this currency for a Latin America issuer and one that priced well inside the US dollar), Brazilian reais (the sovereign’s first global real bond since September 2011), CNH renminbis (HSBC was sole lead for CAF’s first ever dim sum bond), euros (HSBC reopened the market in 2012 with the first Latin American euro issue for América Móvil in July), sterling (Petrobras in September), Mexican pesos (bookrunner on the breakthrough global deal for América Móvil and is the only bank that can execute the settlement), as well as US dollars for many issuers. The bank led four sovereign transactions and 27 corporate issues. It brought 10 high-yield names to market and was sole bookrunner for transactions for Bermuda, Guatemala, Pemex and CAF. HSBC also advised six inaugural issuers on their DCM issuance (OAS, Caixa, Alpek, USJ, Samarco, QGOG) and executed more jumbo/multi-tranche transactions than any other bank. The bank brought the region’s first-ever covered bond for Latin America, for Global Bank. HSBC also executed more liability management transactions – a strong theme for the region last year – than any other bank. The best M&A house award goes to Credit Suisse, which continues to be the leading investment bank in this area (although BTG Pactual’s regional growth will likely challenge the Swiss bank’s hegemony in the coming years). In the qualification period Credit Suisse won more than a quarter of the market by volume (26.67%) and worked on some of the most transformative, complex and high-profile deals in Latin America. Credit Suisse advised on 52 completed M&A transactions with a total value of $41 billion. Some highlights of the year include the bank’s working on the sale of 90% of Amil to UnitedHealth Group for $4.9 billion. Credit Suisse was sole adviser to Amil on the transaction, which was awarded a Euromoney deal of the year for Latin America for significance to Brazil (and specifically its healthcare industry) at a time when questions were emerging about the attractiveness of Brazilian assets: Amil obtained a 50% premium to the market price for its shareholders. Outside Brazil, Credit Suisse advised Carrefour on the sale of its operations to Cencosud for $2.6 billion – widely seen as a good price for the French retailer – its share price rising 6% the day after the sale was announced. The bank also advised the government of Puerto Rico on the first ever big US airport privatization in a transaction valued at $2.6 billion. The deal was complex and groundbreaking, involving political, regulatory and airline industry stakeholders. Credit Suisse remains the only bank dealing with airport privatization within the Federal Aviation Administration programme. The bank also advised Lenovo on its acquisition of 100% of CCE in a deal worth $350 million and it was first-ever technology acquisition in the region by a Chinese company. Other notable highlights include the bank’s role in the high-profile merger of airlines Trip and Azul in Brazil, which created the third-largest airline in the Brazilian market. Credit Suisse also advised AuRico in its disposal of its Ocampo Mine asset to Minera Frisco for $750 million in cash.
Best Risk Advsier The bank’s risk team – 15 dedicated structurers based in New York, Mexico and Brazil – work closely with the bank’s leading teams elsewhere, for example in DCM, to build out a comprehensive proposition. The bank has an impressive array of case studies of individual deals, as well as developing new products. The bank led the innovation in products linked to the BNDES interest rate – the TLJP, which is a bespoke, floating rate – that enables local companies to manage out the exposure in local Brazilian reais or enter into cross-currency swaps against the index against most global currency pairs. HSBC has executed TLJP hedges as long as 10 years, and during the qualification period the bank led the market. Another example of HSBC’s ability to bring risk solutions to new areas came following the Brazilian government’s tax exemptions of some specific financing lines (Circular 3622) and limited to a certain amount for each bank. As a big provider of 3622 lines, HSBC was a leader in developing competitive and scarce financing for specific clients, driven mainly by their demand for cross-currency or interest rate swaps attached with such lines in order to match their balance-sheet currency, or some interest rate mismatch, since the funding could only be in fixed-rate BRL. The bank has also provided international clients with many FX-risk solutions, in all major regional and international currencies. The team works extensively in project and export finance hedge participation and swap arranger roles in Latin America. This has helped – and in turn is helped by – HSBC’s leading position in project finance in the region. HSBC has been more active than any other bank in project finance and has greater diversity of experience across the region’s countries and by industry. The bank has closed transactions in Panama, Chile, Brazil, Mexico and Peru. The deals cover the oil and gas industry, infrastructure, power and utilities and petrochemicals. The bank’s notable deals include Braskem’s Etileneo XXI petrochemicals project in Mexico. The deal was worth $3.2 billion and was the largest project finance deal in Latin America in 2012 and one of the biggest ever in Mexico. HSBC acted as B loan mandated lead arranger, SACE facility lender, hedge provider, interest rate coordinator and cross-currency swap sole coordinator. HSBC was also joint lead arranger for the $534 million term-debt facility to finance a 504MW hydroelectric power plant in Peru. Upon completion, Cerro Del Aguila will be the largest hydroelectric power plant in the country. Finally, the bank also led the project financing for a $1 billion coal-powered plant in Chile in a deal that illustrates the bank’s claim to be a one-stop-shop: it provided advisory, project financing arranging, interest rate and currency swaps, as well as trust services. Citi’s leading flow business to organisations in Latin America is successful in its own right but also gives the bank an edge when developing client relationships that can be leveraged at the corporate level and through to the investment bank. Citi has 22 dealing rooms in the Americas that provide clients with unmatched liquidity. Citi employs over 400 people in the region and covers over 12,000 institutional clients in Latin America, including large and small corporates, sovereigns, investors and financial institutions. Citi is among the top three dealers in all flow products and this is leading to strong flow-related revenues in Latin America. Citi has a wide range of derivatives products from forwards to highly customized exotic options in all classes: FX, local and G10 rates, commodities, credit and equities. For example, the bank says it has increased FX transactions by 30%, a leading position corroborated by central banks’ data. Citi has been ranked the leading private bank – in volume terms – by the Central Bank of Brazil for six consecutive years. Citi also offers regional clients 24 hours trading on 130 global currency pairs from its offshore trading centres. Citi also takes the award for excellence in cash management in the region, which, like flow, gives the bank unparalleled access to corporates, sovereigns and financial institutions in Latin America. It provides integrated cash and treasury management services to the public and private sector throughout Latin America and has 17,922 clients. This depth is facilitated by its 2,200 regional offices and its 30 network extension partners. Citi’s systems processes 130 million collection transactions equivalent to $850 billion and operate 197 shared service centres. The bank’s growth continues in this area, with its market share – measured in Swift transactions from and to Latin America – growing to 20% from 18.7%. In December, the bank had increased client wins by 29.7% over the previous year (in 2011 the bank grew by 13%). Local average deposits in Latin America increased by 15% and transactional volumes by 35%. International payment and US dollar clearing transactions grew by 7.7%, reflecting the increasingly international nature of Citi’s cash management for Latin America-based clients. Since 2009, US dollar clearing transactional activity has grown by an impressive 28%. The bank continues to invest specifically in technology; its award-winning mobile platform, CitiDirect Mobile, is now available in 22 countries in the region and in three languages. As well as a diversified list of regional clients, Citi has an impressive list of the world’s leading multinationals, which are increasingly seeking cash management services in this still-growing region. |
