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Banking

Private banks build on Latin wealth boom

The number of wealthy individuals in Latin America is growing fast on the back of high commodity prices, buoyant equity markets and foreign interest in acquisitions and IPOs. Private banks are adapting quickly, developing new products to attract investors intent on diversifying from their traditional reliance on fixed income and offshore investment. Jason Mitchell reports.

THE RECENT EMERGENCE of a Mexican, Carlos Slim, as the world’s richest man is an indication of the growing wealth of Latin America.

According to the latest Merrill Lynch/Capgemini Annual world wealth report, there were 371,000 high-net-worth individuals (those with more than $1 million in investable assets as well as their principal home) on the continent at the end of 2006, up 10.2% on 2005. Total investable assets held by HNWIs in the region jumped by 23% last year to $5.1 trillion. Brazil, Latin America’s biggest economy, has 120,000 HNWIs, up 10% on 2005.

Although there are many more HNWIs in Asia (some 2.6 million), they have a total investable asset base of just $8.4 trillion, indicating that the concentration of wealth in Latin America is much higher than in Asia.

Many of them, such as Slim (whose personal fortune in July reached $63 billion, some $4 billion more than that of Microsoft’s Bill Gates), have done well on the back of rising stock markets.

This year, domestic investors seem to have become more aggressive in their local markets, fuelling the rise in the value of the region’s equities. However, in July, foreign investors also poured into Latin American emerging markets, seeing them as insulated from the US sub-prime crisis but useful as a high-return alternative.

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