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Paraguay’s positive growth and credit metrics create a compelling investment story and Banco Basa is leading the country’s financial evolution – for the benefit of both domestic and international investors, says president Fernando Paciello.



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Fernando Paciello, president, Banco Basa

Banco Basa is a leading Paraguayan financial institution and, just like our country’s economy, the recent history is a story of strong and sustainable growth delivered through the diversification of revenues.

Our strong management has a clear and differentiated vision for growing the bank, aligned with our country’s growth, and this has led Banco Basa to outperform our competitors in recent years. Today that management is changing, though the vision and commitment to being part of the Paraguayan growth story will remain as strong as ever. As incoming president from the beginning of March, I am strongly committed to delivering Banco Basa’s strategy into a new era. 

Since the end of the global commodities boom in 2014, many of the Latin American economies have experienced slowdowns, even recessions, with many suffering deteriorating public finances and ratings downgrades.

In sharp contrast, Paraguay has sustained strong GDP growth, averaging around 4% annually and – thanks to a strong set of fiscal laws that govern public sector expenditures – improving ratings. Paraguay is now just one notch below investment grade with Moody’s and Fitch, and two below with Standard & Poors.

During these changing times, Banco Basa has been helping local and international companies alike embrace the challenges and opportunities – both regional and domestic. And just like Paraguay’s economy, we have experienced strong growth – 2019 was the seventh consecutive year in which we grew our revenues and profits above the system average. 

Banco Basa is unlike any other bank that operates in Paraguay. First, we are completely local – our managers and shareholders are exclusively Paraguayan. Our knowledge of the country and its companies, and our connections throughout all sectors of the economy, is unsurpassed.

"Paraguay is now just one notch below investment grade with Moody’s and Fitch, and two below with Standard & Poors."

Second, we have a uniquely long-term vision, both of the economy and for our client relationships. Our depth of knowledge of the macro-economic environment combines with our unmatched understanding of the economic and financial fundamentals that affect the industries that drive our clients’ businesses. It’s not surprising that we have the deepest relationships within the Paraguayan productive sector and Banco Basa sponsors both the Paraguayan Industrial Union and the Paraguayan Cattle-Raising Association. 

This long-term vision is why we are uniquely trusted: our funding mix is more than 60% made up of long-term deposits, whereas Paraguay’s financial system as a whole is dominated by sight deposits. This stable funding structure gives us the longer-term perspective that truly differentiates Banco Basa as a bank. The economic flatline of 2019 was caused by a slowdown in a drought-affected agricultural sector. Where many of our competitors responded in the first half of the year by seeking to lower its exposure to agriculture and related sectors, Banco Basa increased its commitment, winning market share and – more importantly – new client relationships.

Because at Banco Basa we believe the real reason we have been outpacing the growth of Paraguay’s financial sector – our market share has grown to 5.1% from 1.9% just five years ago – is that we have adopted a client-centric approach rather than being another bank selling products. The outlook for future growth is hugely positive: Paraguay’s financial system is about 40% of the size of its GDP – both in terms of assets and liabilities – and with a regional average of 60%-65%, the opportunity for structural growth in the financial system is clear. 

And these client relationships have not just grown our existing business but they have taken us into completely new areas. In 2019, Banco Basa became the first Paraguayan bank to launch a brokerage service (certified by the central bank). However, Basa Capital is much more than just a trading operation: we offer a full range of investment banking services, including M&A, and we are leading the development of the country’s burgeoning infrastructure-finance market. We believe that our capacity to help clients grow shouldn’t be limited by our balance sheet, and the creation of Basa Capital is a crucial part of delivering that strategy.

The main driver of Banco Basa’s growth in recent years is a genuine belief in Paraguay’s bright economic future. We believe that becoming an investment grade country is just a matter of time and Banco Basa is working hard to anticipate the added growth impulse that will come. There is huge potential in the country’s capital markets and our commitment to this development process is clear: in February 2020, Banco Basa was the first bank to sell local bonds with a 10-year tenor. The high level of oversubscription for that deal was testament to the strong name the bank has in the local markets. But we are planning for more, with the bank’s decade-long track record being verified by international ratings agencies and audit firms, as well as by Kroll from a compliance perspective. 

International recognition has already come our way. Euromoney magazine awarded Banco Basa with best bank in Paraguay in its 2019 awards for Excellence – the first wholly Paraguayan financial institution to receive this award.

One of the main challenges for the Paraguayan economy in the coming decade will be to continue to deliver strong growth in a sustainable way – financially and environmentally – for the whole of society. Banco Basa is leading here, too. We are committed to being a strong corporate citizen, as illustrated by our environmental, social and corporate governance policies that include running Arambé school for 350 underprivileged children and our full membership of Sustainable Finance.

Our commitment to drive this growth has a single source: we believe in Paraguay.

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