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Competition in a growth market

According to Dealogic, investment banking revenue for Latin America last year was $1.76 billion. It’s a healthy revenue stream but is still dwarfed by other regions, so why the focus on Latin America? The answer is simple, according to Mark Rosen, Bank of America Merrill Lynch’s new head of Latin America. "It’s where the growth is," he says. "We see substantial growth in fees in Latin America excluding Brazil this year – are we going to see that in the US? We could see a doubling of fees in the next few years in Latin America, that’s just not possible anywhere else. So, yes, volumes and fees are smaller in Latin America at the moment but that’s where the growth will be coming from."

Another banker says: "Competition is tough and margins get compressed, but I think fees have stabilized." There are, however, repeated complaints of some banks doing deals uneconomically for league table rankings. Fees are reportedly especially slim on deals for sovereigns and quasi-sovereigns. "Sovereigns have all aligned to a point where you either will or won’t go," says one banker. El Salvador’s $654 million January bond, led by Deutsche Bank, was rumoured to have paid one basis point.

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