Best bank: Banco Macro
Welcome to the optimistic part of the cycle for Argentina: international investment banks re-rate the outlook for the small cohort of large, listed banks and those banks start to look to consolidate. The last cycle saw equity issuance, but the banks had barely topped up the funds in their M&A war chests before the optimism faded away alongside their newly positive book values.
This time the optimism of a new president with promises of liberal market economic reform has been turbocharged and we have already seen banking M&A take place – Banco Macro leading the way with its acquisition of Banco Itaú. This first-mover status is a large part of the reason that Macro wins the award for Argentina’s best bank – boosting its profits, profile and outlook in one very reasonably priced deal. Around $50 million for a well-run bank with a decent minority franchise is a good piece of business, however much it raises questions about how keen the Brazilian bank was to shed its business in the country.
Macro now has 519 branches and 9,912 employees who serve 4.96 million customers – 2.1 million of whom are digital customers – and around 140,000 corporate customers. The bank has also benefited from its capillarity within Argentina, with more than 80% of its branches in the interior of the country. These areas offer outsized growth thanks to booming agriculture and soft commodities prices – and are now further supercharged by the investments going into lithium and energy in remote areas of the country.
Even without the acquisition of Itaú, Macro has also been achieving above-par growth in recent years and its 2023 numbers are impressive. All Argentine banks’ reports are full of large numbers – annual inflation of 211.4% in 2023 will have a distorting effect – even so, Macro’s 789% increase in net income and 327% increase in operating income lead the pack. The bank’s return on equity is 20.3%. Banco Macro’s chief executive Jorge Brito is also keen to stress that these results were obtained with a leverage ratio of just 3.3 times assets to equity, a clear hint that the bank will be seeking to increase leverage to improve profitability ratios in the coming years.
Best investment bank: Citi
The appeal of Argentina for international investment banks is also growing as the “Milei-effect” brings the promise of investment. Business leaders such as Tesla’s Elon Musk have been keen to be seen embracing the new president while promising much-needed foreign direct investment into the economy. How much of the froth will turn into substance remains to be seen, but it was noticeable how this was a popular theme in the award submissions this year, although many struggled to point to a substantiative list of client work.
Citi was one of the few that had an active year in 2023 and wins the award for Argentina’s best investment bank with a strong showing after a few quiet years. If the bank can maintain its momentum in the country, it could become an interesting investment banking franchise for the US firm. In 2023 Citi was a lender, alongside CAF, in a loan to YPF. It provided both capital and interest rate swaps for the transaction.
Elsewhere Citi was active on AES’s successful exchange offer, which saw the issuer extend $274 million of the outstanding 2024 notes, providing AES with a crucial extension of its debt maturity profile in what is still a very volatile debt market for Argentine companies. Similarly Citi participated in CAPEX’s 2023 exchange offer, which saw 82.7% participation in the extension of 2024 notes to 2028. And as the emphasis of the debt markets begins to shift away from re-profiling existing debt, Citi can also point to primary issuance, with its $800 million, seven-year issue for YPF – a deal that marked the reopening of Argentina to new money for the first time since 2021 and the largest corporate transaction since 2017.
Citi also leaned on its strength in the Latin American loan markets to close dollar-linked loans for companies such as Pan American Energy and Posco Argentina – the latter combined an export credit agency loan and was notable for its 10-year tenor.
Citi’s Argentine business – led by chief country officer Federico Elewaut – was also able to leverage its trading strength in the region to execute important deals, such as its blue chip swap trade for AMX Argentina, which not only de-risked the FX exposure to the company’s 5G license but also generated over $3 million in revenues for the investment bank. Such integration in the risk business offers strong profitability should deal volume pick up and could be an appealing area of differentiation against many other players in the Argentine market.
Best digital bank: Banco Santander
Banco Santander achieved impressive digital penetration in 2023, with 3.1 million customers, or 64.6% of its customer base, now using digital services.
The digitalization of its vehicle lending process contributed to growth of 336% year on year in this business. The bank’s market share in agricultural lending increased by 1.2 percentage points to 8.8%, helped by the introduction of a new digital agribusiness platform.
The bank simplified operations while leveraging new technologies such as robotic process automation, artificial intelligence and cognitive solutions.
It also focused on reducing the likelihood of critical events. It implemented cyber and fraud recommendations across the business and performed well in simulated phishing attacks.
Best bank for ESG: Banco Santander
Banco Santander continued to support the country’s green transition and led the market in terms of green, sustainable and sustainability-linked bonds and loans.
A key area of focus for the lender was boosting its agricultural portfolio with new incentives for no-till farming. This incentivizes sustainable farming practices, leading to improved soil health, increased crop yields and a positive impact on the environment due to reduced carbon emissions.
Santander also prioritized education and financial inclusion as key drivers to strengthen its environmental, social and governance brand. Collaborative efforts with public and private organizations resulted in the provision of training and workshops to teach skills for the transition to a low-carbon economy.
Best bank for corporates: Banco Galicia
In 2023, Banco Galicia became the first Argentinian bank to onboard new corporate customers entirely digitally with its new intelligent natural language processing platform. The bank can now analyze documents in real time and customers can open and start using their account almost immediately. Its corporate customer base reached 135,666 at the end of the awards period.
Banco Galicia also introduced the first bank loans backed by agricultural tokens in Argentina. This allows agricultural producers to get finance using their digitized grains as collateral. The use of digital grains as an asset-backed guarantee makes the process more efficient for both the bank and the producer.
The bank also introduced NAVE, a digital platform providing end-to-end payment solutions for businesses.
