Argentina’s banks seek growth and acquisitions
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Argentina’s banks seek growth and acquisitions

Banco Patagonia sale piques interest of main players; consolidation of smaller banks coming in next two years.

Banco do Brasil’s move to sell its 58.6% stake in Banco Patagonia has excited Argentine bankers who expect a wave of consolidation to sweep through the sector. BBVA Frances, Itaú, Banco Macro and Banco Galicia are expected to be the interested parties looking to buy the Brazilian state bank’s Argentine assets. The sale follows on the heels of Citi’s agreed sale of its retail business in Argentina to Santander Rio.

JPMorgan has been mandated to advise on the Patagonia sale – Banco do Brasil is keen to sell to shore up its regulatory capital and avoid issuing fresh equity in its home market. The deal would be a large one for any purely domestic buyer – both Macro and Galicia would have to raise equity to finance such an acquisition, and it is unclear whether their controlling shareholders would accept dilution. Another issue is the position of the three minority shareholders, Jorge and Ricardo Stuart Milne and Emilio Gonzalez, who own more than 21% of Banco Patagonia and have put and call options on their shares. 


160x186 Maria Valeria Azconegui

Maria Valeria Azconegui,

One possibility is that the bank first reduces its stake through a secondary listing on the New York Stock Exchange ahead of a private sale of a smaller block of shares. However the deal proceeds, it is unlikely to be the end of consolidation in Argentina’s financial sector.  

As the Argentine banks emerge from the regulatory deep-freeze that was in place under the administration of former president Cristina Kirchner there is certain to be increasing competition – both organically (with banks expanding networks) and inorganically. 

During the previous administration, Santander Rio shelved its IPO plans and BBVA Frances let its market share dwindle as the bank reduced exposure to the country – with BBVA’s share of private-sector deposits falling from 9.5% in 2007 to 6% today. However, Santander’s acquisition of Citi’s $1.4 billion of assets, for an undisclosed fee, shows it is moving into growth mode and BBVA’s local management has also been vocal about attempting to regain lost market share in the coming years.

Also, Banco Galicia’s chairman, Sergio Grinenco has told Euromoney the bank plans to open 26 branches over 12 months after zero openings in the previous five years. UBS analyst Frederic De Mariz says such actions will be typical of the larger banks. “We believe Argentine banks will need to grow the currently small branch network in the country,” he says. “Moreover, branch presence will be a deciding factor in future M&A.”

Growing market share through acquisitions will clearly be desirable as banks look to gain scale and, as well as the sales of Citi’s operation and Banco Patagonia, there are persistent rumours about a sale of HSBC’s operations in the country and consolidation of many of the smaller of the 78 banks in the system. Aside from retail banking, Deutsche Bank announced in August that it would sell its Argentine operations to Banco Comafi.

Grinenco says Galicia participated in the sale process for Citi’s assets and confirmed his interest in Banco Patagonia. “Clearly there is an option there, although it depends on the way Banco do Brasil opts to leave,” he says. He declines to comment on HSBC specifically but confirms any buying opportunity would be welcome, and should it happen it would raise Galicia to roughly the same size as Santander Rio after its Citi acquisition.

One senior banker based in Argentina expects HSBC to be sold. “HSBC has incentive to leave – the bank hasn’t been doing very well at all,” he says. “It’s a competitive issue for them – though it would have to settle its money laundering dispute with the government before banks could be interested.”

Maria Valeria Azconegui, banking analyst at Moody’s in Buenos Aires, says: “HSBC has been a potential candidate for acquisition for a long time. I know that several large banks have been analysing them and watching them closely.”


A spokesperson for HSBC declined to discuss “market rumours”, but one well-placed source at the bank pointed to its recent successes in capital markets transactions – such as the Argentine sovereign’s return to the capital markets and a bond issue for the province of Buenos Aires – as evidence that the bank is committed to the country. However, he also disputed that there were any outstanding regulatory issues that would preclude a sale of its Argentine bank.

Azconegui at Moody’s says smaller institutions are also likely sources for consolidation in 2017 or 2018. “There is a very long tail in the Argentine banking system,” she says. “I think there will be consolidation here because the relatively weak efficiency of Argentine banks is related to their size. And, as funding costs rise in the next 12 months, the business models of these smaller niche banks may struggle to survive. Gaining scale will be a very positive driver in keeping their funding costs efficient.”

Grinenco says banks like Galicia will also be interested in opportunities that arise from these smaller banks, as long as their business complements the bank’s existing focus. “We have been targeting the upper end of the retail segment for the past five years and we have created a private bank and a mass-affluent brand,” he says. “We are always looking for [opportunities] that match this type of client rather than others that would add a lot of costs and not a lot of revenue.”

Gift this article