Argentina moves to promote private banking
Local regulation will formalize wealth management industry; Argentine tax amnesty has provided another boost to AuM.
Argentina wants to bring in regulations that will encourage Latin America’s private bankers to register to operate in the country.
The country’s securities commission, the CNV, is proposing to create a new financial classification of ‘global investment adviser agent’ (agente asesor global de inversiones or AAGI). The motivation behind the move is to formalize the participation of foreign-based wealth managers, many of who operate across the border in Uruguay.
Once the AAGI becomes official (the CNV is still working out what the minimum requirements will be for authorization), foreign-based private bankers will be able to operate freely in Argentina, subject to local registration and taxation.
Miguel Sulichin, Advise
Miguel Sulichin, CEO and senior investment adviser at Advise Wealth Management based in Uruguay, says he is already looking at a big Argentinian acquisition to take advantage of the liberalization of the country’s broking laws.
“We are waiting on both the senate and the congress to pass the law that would allow companies to provide wealth management advice,” he says. “We are also talking to large banks and investment managers (operating in Argentina) to provide their clients with investment allocation advice, while they continue to provide the custody services. They have no real appetite to deliver advisory as it brings them more risk than it’s worth – which is where we come in.”
The CNV is drafting the new regulation with the explicit aim of enabling those wealth managers operating in Uruguay (and elsewhere) to participate in their local market by requiring registration and taxation. It will likely boost the local market for banking talent and office space, as well as encourage foreign exchange flows.
Argentina’s successful 2016 tax amnesty led to an influx of private-client wealth into the country, and more is expected to follow in 2017. According to government statistics, almost $100 billion was declared by Argentine nationals in 2016, which provided the state with 1.3% of GDP in extra revenue. An additional $20 billion to $30 billion was expected to be declared in early 2017, according to Bank of America Merrill Lynch. That would add another 0.3% of GDP for this financial year.
According to Sulichin, most of the money that was declared was being held in Switzerland and did not negatively impact the private banking market in Uruguay. Last year Advise also bought a domestic Uruguayan operation, Global Wealth Management, as part of the market’s continued domestic consolidation.
“We expect the Argentine economy to grow at between 3% and 4%,” says Sulichin, who adds that his firm saw a 20% increase in wealth management mandates in the last 12 months. “Plus, now the money from the amnesty is clean, there is a huge opportunity to incorporate that AuM into the private banking industry.”