Bank capital: More lending means more taps on equity markets
Loan growth demands new capital sources; Opportune moment for Brazilian banks
Latin America’s leading banks are likely to tap the equity markets more frequently to support their fast-growing lending businesses, according to senior dealmakers in the region.
"Banks will need capital because of the fast loan growth taking place in the region. There’s only so much tier 1 and subordinated debt they can raise so equity capital makes sense," says Mark Rosen, the new head of the Latin America financial institutions group at Bank of America Merrill Lynch, which he joined last month from Credit Suisse.
Huw Jenkins, managing partner at BTG Pactual, says: "If you look at the stock of financial assets to GDP in Brazil, for example, compared with Korea or the UK, it’s small. As economies grow and their financial services sector deepens, banks will need more capital, so that will be a theme over the next few years."
"As economies grow and their financial services sector deepens, banks will need more capital, so that will be a theme over the next few years"
Huw Jenkins, BTG Pactual
In Brazil, bank credit is growing 2% month on month.