Best bank: Scotiabank
Scotiabank is delivering on the promise of its 2018 acquisition of BBVA’s bank in Chile by consolidating its position as the third-largest private sector bank and is now closing in on second place. The bank closed 2023 with a 14% market share and, according to Fitch Ratings, the best risk rating in the industry. In Chile, Scotiabank enjoyed the highest income growth in the financial system. A combination of fierce cost control and increased digital penetration enabled the bank to generate a 41% efficiency ratio and significant savings. The other side of the balance sheet was also strong: revenues grew 10%. The bank’s operating income grew 9% and its return on equity rose to 12.3%.
However, success also brought additional capital costs last year with the bank being recognized in March 2023 as a systemically important bank, which requires an additional capital charge of 1.25% (phased in until 2025). This additional regulatory charge requires that the bank accelerates growth to dilute its impact and Scotiabank has managed to do just that.
In its retail business the bank added 154,000 new account holders in 2023 (80% more than in the previous year) thanks to its new ScotiaZero digital account. This account was the first free and 100% digital account in the market and does not require proof of income. It provides clients with a digital debit account and even the opportunity to have a dollar-denominated account. The bank was also able to add nearly 18,000 small and medium-sized enterprise clients last year (30% more than the previous year) and a further 900 wholesale clients.
At the end of 2023 Scotiabank launched its new outreach programme, The New Way Forward, for larger corporate clients. The bank hopes to increase its market share of this segment during the coming year with an increased focus on digitization and sector-specific new products, such as an updated cash management service. The bank will also seek to leverage its corporate and investment banking division for potential banking relationships in 2024.
Meanwhile, Scotiabank hasn’t just been adding new customers, it has also been increasing its share of wallet among its existing client base. It’s implementation of an artificial intelligence investment adviser – dubbed a Robo Advisor – that suggests the best investment alternative to clients based on their profile saw more than $800 million in investments committed within the first 10 days of operation.
Best investment bank: BofA Securities
BofA Securities wins the award for Chile’s best investment bank with a clear demonstration of market leadership across equity capital markets, debt capital markets and M&A.
In ECM, BofA claimed 22.5% of all underwriting fees, including being mandated to be lead-left and global coordinator on Banco de Crédito e Inversiones’ $667 million follow-on transaction. In this deal BofA took the Chilean bank on a two-week roadshow, meeting more than 50 investors. The team achieved a 94.6% subscription that resulted in an outstanding ‘rump’ of $35 million shares that were placed by a local auction of nine blocks.
Ultimately the deal closed with a 7.5% discount compared with the US average for marketed follow-ons of 10.2%. This is particularly noteworthy given the market background to the deal in October 2023, which included market volatility among S&P financials, negative performance among Chilean financials and a material depreciation in the Chilean peso. The deal was the largest follow-on in the region ex-Brazil and the largest ECM transaction for a financial institution in Latin America in 2023.
BofA also secured second place in the bond fee rankings, with a 15.8% market share and the team participated on most of the leading DCM transactions during the awards period. These included international issues for SQM, CMPC and Codelco, as well as three sovereign transactions, including the breakthrough sustainability-linked bonds.
However, BofA’s strongest performance in Chile was probably in M&A. The bank was mandated by Southern Cross Group – a leading Latin American private equity group – to sell 100% of the common stock of Esmax, its Chilean fuel distribution company. The deal’s value was undisclosed, but the transaction represents a crucial Latin American acquisition for Aramco, the Saudi energy company. The deal closed in September 2023 but is still awaiting regulatory approval.
Earlier in the year BofA advised JXNMM on its sale of 51% of its stake in Caserones Copper Mine to Lundin Mining Corporation. The deal was worth just short of $1 billion, but this value will likely rise above this threshold as the deal has been structured to provide Lundin the option to acquire a further 19% of the shares for $350 million over five years.
Another notable transaction was BofA’s advisory work for Hortifruti in its public tender process. The deal was worth a total $1.7 billion and the tender price represented a 95% premium to the closing price on the prior day’s trading following the announcement of the tender process. The transaction is the first take-private transaction involving a third-party investor. This is an important credential for BofA as there are many other companies in the region assessing similar strategies given reduced public market valuations.
Best digital bank: Scotiabank
In 2023, Scotiabank introduced new digital products and saw its digital sales rise to 88% of total sales, maintaining a year-on-year growth of more than 10% in each of the last three years. The bank added more than 154,000 new current account holders in 2023, 80% more than in 2022, primarily through the launch of the ScotiaZero digital account at the end of 2022.
New products include its loyalty programme, ScotiaZero, new digital services for small and medium-sized enterprises and digital commercial loans through FOGAIN.
The bank has reviewed and digitized more than 133 internal and external processes. This has translated into $9 million in savings between April 2022 and March 2023.
Best bank for SMEs: Banco Santander
Banco Santander has a leading market share in terms of cheque accounts in pesos and in dollars for small and medium-sized enterprises. The number of SME clients grew by more than 62,000 to 386,028 in 2023, a 19% increase year on year.
The bank’s SME loan portfolio stood at $4.3 billion by year end and represented 9% of the bank’s total lending. It has a 23% market share of SME lending in the country.
Best bank for ESG: Banco Santander
Banco Santander worked with both the private and public sectors in Chile to push forward sustainability-linked deals in 2023.
The bank’s green, social and sustainable financing reached $850 million in 2023, which included both local and international debt capital markets advisory. The bank worked with Chile’s government to help put together the country’s environmental, social and governance framework.
In 2023, Banco Santander also issued a $53 million green bond to finance green mortgages in the country.
Best bank for corporates: Scotiabank
Scotiabank worked on more than $6 billion worth of syndicated and structured loans and project finance deals in 2023. These included Phoenix Tower International’s acquisition of WOM’s Chile tower portfolio for $930 million. The deal involved a $2 billion financing, including a $1.4 billion term loan, a $550 million delay draw term loan and a $56 million revolving credit. Scotiabank acted as sole financial adviser in the acquisition and sole lead arranger and bookrunner on the financing.
It also worked on the deal between Global Infrastructure Partners and Glacier Acquisition Co. Scotiabank lead arranged a $345 million deal for the acquisition of an incremental 693 megawatts of capacity as part of the Chile Renewables joint venture. Scotiabank acted as joint lead arranger, green loan coordinator, lender, issuing bank and hedge provider.
Scotiabank was also involved in deals with Minera Los Pelambres, for which it closed a $410 million five-year senior unsecured syndicated term loan and a deal with Celulosa Arauco where Scotiabank closed a $275 million, a three-year senior unsecured syndicated term loan.
