Deutsche retreats from LatAm
Euromoney Limited, Registered in England & Wales, Company number 15236090
4 Bouverie Street, London, EC4Y 8AX
Copyright © Euromoney Limited 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Deutsche retreats from LatAm

Bank cuts business in five countries; Brazil spared but offering diminished.

Deutsche Bank’s decision to withdraw from five Latin American countries and redefine its role in Brazil, which will become its only regional office, is further illustration of the strategic difficulties facing international banks.

Deutsche is leaving Argentina, Chile, Mexico, Peru and Uruguay as part of its reorganization to cut peripheral businesses and exposures, meaning half of the 10 countries the bank is exiting are in Latin America. 

Deutsche declined to provide details of the job cuts in the region but said that in total 700 redundancies will come from the 10 global office closures. The Brazilian office will also become more of a commercial-banking operation to support global clients rather than its original aim to offer full-service investment banking.

Unlike many other recent withdrawals by international banks, Deutsche’s subsidiaries in the region are reported to be profitable. 

However, the decision to close operations across the region came as part of a strategic decision to pare back operations that are insignificant in delivering group profits – Latin America has never delivered more than 2% of group revenues. Excluding Brazil, the region contributed just €215 million in revenue and €147 million to group profits in 2015.


The bank is also redefining its business plan to support its global clients and much of Deutsche’s business in Latin America has been won from local clients – an impressive feat, particularly in Mexico where it won prestigious mandates in DCM and ECM from blue-chip locals such as América Móvil and Sempra – but one that ultimately was deemed to be contrary to the new vision.

The bank’s Latin America CEO Bernardo Parnes, who had overseen the development of a local client list throughout the region, declined to speak to Euromoney about the implications of the bank’s new strategy for the region. 

Deutsche turned down all interview requests but a former senior officer based in Europe told Euromoney that it had, for years, “had constant battles to convince clients that we were committed to the Americas in general. Which looks like a fair suspicion in retrospect”.

Eduardo Ribas-160x186

Eduardo Ribas, Fitch

Eduardo Ribas, a director on Fitch’s banks team in São Paulo, says Deutsche’s move makes sense. “These subsidiaries were quite profitable but they weren’t adding value in terms of return on capital,” he says.  “For Deutsche Bank, this move was much more linked to streamlining its business model, and reviewing subsidiaries that weren’t adding much in terms of strategic value or that were not serving key clients.” 

Ribas also says the bank told him that it had been under pressure from regulators to centralize trading operations. “There was pressure from the regulators for DB to concentrate its emerging market trading desks in developed markets,” he says. 

“There is a perception that having these trading platforms in small emerging markets – in small operations – increases the risks and makes it a little more difficult to control and increases operational risk. Some of these subsidiaries’ sole business was EM trading and so it is much easier to just shut them down rather than transform them into a new business.”

Ribas also says that while Argentina was a more full-service office, he thinks the bank’s review gave it operational cover to exit. 

“Deutsche Bank has a much more comprehensive bank in Argentina but maybe it was a good time to discuss if it wanted to stay in the country with all the political instability – I think it facilitated making a decision to leave that country,” he says.

While Deutsche’s withdrawal will not have a big impact on the market dynamics in the countries it is leaving, as it was not dominant in any of them, local banks are expected to benefit at the margins.

It also demonstrates the difficulties facing the international banks: in Mexico RBS, ING Group and BNY Mellon have retreated in recent times. In Brazil, Deutsche’s strategic pivot follows the scaling back by Barclays, Morgan Stanley and Goldman Sachs. 

In Mexico, Alejandro Tapia, a director of Fitch’s banks group in Mexico City, says Deutsche’s withdrawal comes as other international banks seek to enter the market. Tapia says Deutsche’s Mexico City office is “very successful” and that the country’s potential economic growth, and the low level of credit penetration to date, is prompting new banking entrants.


“The local regulator is looking to encourage more banks into the country to increase banking penetration and in the past three years they have approved 12 new banking licences – local and foreign,” says Tapia. Overall banking penetration in Mexico remains relatively low, with private credit to GDP at 31%, versus 55% for Brazil. 

Tapia says the model for the new entrants will be to open brokerage operations and trade and commercial franchises. He does not expect new entrants to the country’s retail market, which is consolidated by the top seven banks holding 84% of the market share.

The exception is HSBC, which has put what Tapia calls “very ambitious” targets on its Mexican subsidiary to avoid being sold. 

There have been market rumours that Scotiabank is interested in HSBC Mexico, and with Banorte as the only local bank to have the scale to buy HSBC Mexico – and it has said it is not interested in further acquisitive growth in the next few years – a sale by HSBC could offer a foreign competitor access to a retail market with large potential.

Gift this article