FiNETIK – Asia and Latin America – Market News Network

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Latin America: Investors Newsletter 15 June 2012

Petrobras Is Worst Big Oil Investment on Deepwater Disappointments: Energy   Petroleo Brasileiro SA is the worst investment among the world’s biggest oil companies this year as Brazil’s state-controlled producer suffers delays and cost overruns developing the largest oil finds in more than a decade.

Iusacell, Telefonica to challenge Mexico’s Slim America Movil  – Iusacell and Spain’s Telefonica said on Wednesday they have reached a deal to share their infrastructure in Mexico as they seek to mount a

FX swings may stir debt investors in Mexico, Peru  Mexico, Peru debt mkts most vulnerable to outflows in Latam. * Peru acting to curb FX, Mexico avoiding intervention.

Mexico’s Slim family (Grupo Carso) takes stake in Argentina YPF nationalized enegy company Mexican tycoon Carlos Slim and his family have taken a stake in Argentina’s recently renationalized energy company YPF in lieu of a loan guarantee, ..

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Filed under: Argentina, Brazil, Energy & Environment, Latin America, Mexico, News, Risk Management, Venezuela, , , , , , , , , , , , , , , , , , , , , , ,

Mexico: Foreign banks highest charges, lowest services

According to a survey by “La Expansion/CNN” the service quality of the 8 biggest banks in Mexico (Banamex, BBVA-Bancomer, HSBC, Santander, Scotiabank, Banorte, Ixe and Inbursa) scored an average of 6 out of 10 in service quality.

IXE Bank led with 8.6 score as the best and most customer friendly service provider, while CitiBanamex and HSBC where below average.  The 8 banks cover 80% of the Mexican market.

According to the survey the bank clients rated woerse the commisions the banks are charging for the value added (or the abscence of it) by the financial service providers.

See the rating chart below: 10 = excellent, 9 = very good, 8 = good, 7= average, 6 = sufficent, below 6 = failed.

Source: La Expansion, FiNETIK,  19.03.2009

Filed under: Banking, Mexico, News, Risk Management, , , , , , , , , , , ,

Mexican Bank Outlook update 2009

Mexican Senate to limit Excessive Credit Card charges by foreign banks, observed by U.S. Senate – 28.03.2009 Update

Mexico: Big foreign banks highest charges, lowest services – 20.03.2009 Update

Banamex  Citibank Earnings (Excerpt from Bloomberg article  17.03.2009)

Profits at Mexico City-based Banamex doubled from 2002, the first full year it was part of the U.S. bank, through 2007, Citigroup Latin America Chief Executive Officer Manuel Medina- Mora said last year. Banamex revenue climbed 6.3 percent in 2008 to 85 billion pesos ($5.86 billion), Chief Executive Officer Enrique Zorrilla said last month. Citigroup’s 2008 sales fell 33 percent to $52.8 billion, according to Bloomberg data.

Now, after New York-based Citigroup received $45 billion in government rescue funds and its shares tumbled 73 percent this year, the outlook for Mexican banking subsidiaries also is dimming as the country heads for its first recession in eight years. The deepening slump in the U.S., the destination for 80 percent of Mexican overseas sales, is curbing export revenue and trimming remittances that help keep up local consumer demand.

Mexican banks will have a “complicated year because of pressures from defaulted loans, a byproduct of the economic backdrop,” said Juan Partida, a banking analyst with UBS AG in Mexico City. UBS estimates Mexico’s economy will contract as much as 4 percent this year.

Paulo Carreno, a spokesman for Banamex in Mexico City, didn’t return calls seeking a comment. Ovidio Cordero, a press representative for Madrid-based Santander, declined to comment. Ruth Lavelle, a press officer at London-based HSBC, didn’t reply to an e-mail request seeking a comment.

Shrinking Economy

Mexico’s economy will shrink 1.9 percent in 2009, according to the average forecast of 30 economists surveyed by the central bank and published this month. Morgan Stanley said yesterday that the economy will contract 5 percent this year. Mexico’s gross domestic product expanded 1.5 percent in 2008, central bank Governor Guillermo Ortiz said in January, after growing 3.2 percent in 2007.

Migrant worker remittances will decline this year after falling in 2008 for the first time since the central bank began tracking transfers in 1995, Mexican Deputy Finance Minister Alejandro Werner said last month. Mexico’s unemployment rate surged to 5 percent in January, the highest since the statistics agency began measuring the data in 2000.

Consumer Lending

While Shaw wrote in a report last month that bad loans will keep rising, Deutsche Bank AG recommended last week that investors take an “overweight” position in Mexican financial stocks. New York-based strategist Guilherme Paiva said Mexican banks will benefit from an increase in lending to consumers who have low debt levels relative to disposable income.

The recommendation helped send shares of billionaire Carlos Slim’s Grupo Financiero Inbursa SA to their biggest gain since 2002, and pushed up Grupo Financiero Banorte SAB, Mexico’s largest publicly-traded bank.

“Banks are going to suffer, but the year is not going to be a catastrophe,” said Angelica Bala, a banking analyst with Standard & Poor’s in Mexico City. “The capitalization of the Mexican banks is the system’s strength.”

Legislators from the nation’s three biggest political parties and bankers will get together on March 19 and 20 in Acapulco, Mexico. President Felipe Calderon, Ortiz, Finance Minister Agustin Carstens and former U.S. Federal Reserve Chairman Alan Greenspan are scheduled to speak at the conference.

Source: Bloomberg, 17.03.2009  Jose Enrique Arrioja at jarrioja@bloomberg.net; Valerie Rota vrota1@bloomberg.net.

Filed under: Banking, Latin America, Mexico, News, , , , , , , , , , , , , ,

Rumor: ITAU to buy Banamex from Citigroup

Marcia Peltier Column at Jornal do Commercio (Rio de Janeiro) says that Itau-Unibanco will announce next week the purchase of Banamex. It also says that executives from brazilian bank are already in Mexico City.

Itau-Unibanco opportunities in US crisis

There are two immediate analyses that Itaú has to do. The first is the sale of Citibank’s’ stake in the credit card processor Redecard. The stake is worth R$ 2.9 bn, at market value. Itáu declared that it is only interested in buying 24 mn shares, which will allow it to be the largest shareholder, with a 26.7% stake. At market value, Itaú will have to pay R$ 573 mn. As Redecard trades at 24x BV, it will mean that, net of tax, Itaú will pay less than R$ 400 mn. Itaú also stated that it would like to find a strategic partner for the rest of the stake. The only bank Itau would feel  fit the bill is HSBC, but we are uncertain if it desires to hold such a stake.

The second immediate opportunity that arises, also due to Citibank’s financial problems, is the sale of Citi’s Mexican bank. According to Mexican law, no foreign government can own a bank in that country. As Citi will have as a major shareholder the government of the United States, the situation forces them to sell their Mexican stake. This would be a very attractive asset for Itaú, as it would assure the bank’s international expansion. However, we expect it to let it pass due to the current process of digesting the merger with Unibanco.

Itau Unibanco are in merging process

Itaú and Unibanco have effectively begun the merger of the two banks. There are no expectations of major lay-offs, as
management expects natural turnover and retirements to decrease the total number of employees. There have been
some reductions in specific areas, but nothing significant enough to affect personnel expenses. By 1H10 the merger
should nearly be over, with only some back office mergers in 2011. According to management, there will be no
significant reduction in the number of branches.

IXE Casa de Bolsa conference call: ITAU

Source: IXE Casa de bolsa, 27.02.2009, 03.03.2009

Filed under: Banking, Mexico, News, , , , , , , , , , , , ,

Citigroup-Banamex: Failed US Banks vs. Soild Mexican Institutions

Does the US government’s 36 per cent stake in Citi violate Mexican ownership laws? Have we got our countries confused? No. Citi owns Banamex, a Mexican bank with circa 1,200 branches and 2.6m checking accounts. And Latin American finance blog Inca Kola sees a fight brewing over the Southern subsidiary:

The nub of the issue revolves around Mexican law, which states in crystalline manner that foreign governments cannot own more than 10% of any bank that operates inside Mexico. It’s as clear as a bell and on the statute. So as Banamex is a wholly owned subsidiary of Citigroup (C paid $12.1Bn or so back in 2001 for the bank) if the US Gov’t takes its 36% stake in Citigroup then it will be a larger-than-10% shareholder of Banamex, something against Mexican law. Won’t it?

Mexico’s National Banking ans Securities Commission is therefore investigating, while Banamex is saying that the North American Free Trade Agreement will (somehow) protect it.

Selling Banamex would effectively mean an even worse deal for the US government. The unit’s been described by Citi as one of its “crown jewels”, managing to post an $896m net profit for 2008, making it one of the least toxic parts of the banking group. Banamex is accordingly part of Citicorp — the retail (read: non-toxic) part of the Citi empire. Full Article click here.

Source: FT Alphaville 02.03.2009, Inca Kola News 01.03.2009

Mexico Gov. Studying Effect on Banamex of U.S. Aid to Citi,

(Bloomberg) Mexico’s National Banking and Securities commission said it’s studying the legal impact of the U.S. government’s stake in Citigroup Inc., which owns Grupo Financiero Banamex SA.

The U.S. government announced today it plans to convert as much as $25 billion of preferred shares of Citigroup into common stock. The conversion would give the U.S. a 36 percent stake in the New York-based company. Mexico’s banking law prohibits foreign governments from owning or having a stake in banks that operate in Mexico, like Banamex. Citigroup purchased Banamex for $12.5 billion in 2001.

The commission has asked all banks operating in Mexico that have received help from governments to provide information on the aid, the statement said. The banking commission and other financial authorities will “soon” release information on the study, the body said in a statement.

“The Mexican financial authorities are analyzing the legal implications of the aid that foreign governments have granted foreign financial entities that have subsidiaries in Mexico,” the agency said.

Speculation has mounted in recent weeks that Citigroup may sell Banamex to raise cash and shore up capital amid the global financial crisis. Chief Executive Officer Vikram Pandit flew to Mexico Feb. 19 for two days of meetings with clients, Banamex officials and government officials, including Finance Minister Agustin Carstens and central bank Governor Guillermo Ortiz.

Citigroup fell 96 cents, or 39 percent, to $1.50 at 4 p.m. in New York Stock Exchange composite trading as a record 1.87 billion shares changed hands. The stock has plummeted 94 percent in the past year.

Source: Bloomberg 27.02.2009 Andres R. Martinez in Mexico City at amartinez28@bloomberg.net

Mexican Bank Asset Value

(IXE) According to local newspaper EL UNIVERSAL columnist Alberto Aguilar, ITAU is one of the government’s favorite candidates to acquire Citigroup’s BANAMEX if they have a minority stake in a group led by Mexican investors.Other candidates that have expressed interest are JP Morgan Chase and HSBC.

IXE understands that if Citibank sells Banamex, it will likely sell its BZ.Bradesco branch as well. Due to the fact that Banamex ranks in second in Mexico (assets) and first (equity), along with an important corporate loans book, while the BZ subsidiary present loans book smaller than the ones presented by mid-size banks, and with a lower ROE, which could be higher considering its BZ peers. Furthermore, Citibank BZ does not present important market share in any particular segment in Brazil.

Banamex instead, possess a significant Mexican banking market (see file attached). This would be a very important operation for Itau if it materializes. We believe foreign players could be potential acquirers of Banamex (including Itau) because local players could end up having problems to find funding to finance the operation in the future. If Itau buys Banamex, it will be coherent with Itau’s Roberto Setubal past speeches.

The following is a table of the size of Mexican Banks (Tot. Assets 2Q08 in billion US$)

US$ 53.4 bn BBVA Bancomer
US$ 38.9 bn Banamex
US$ 31.5 bn Santander
US$ 26.8 bn HSBC
US$ 21.0 bn Bannorte
US$ 12.7 bn Inbursa
US$ 10.0 bn Scotia

Source: IXE Casa de Bolsa, 28.01.2009

Filed under: Banking, Mexico, News, Risk Management, , , , , , , , , , , , , , , ,

New York Times confirms $250m deal with Carlos Slim

The New York Times confirmed last night that it had reached an agreement to take an $250m (£171m) investment from a group of companies controlled by Mexican billionaire Carlos Slim Helú to offset crippling debt.

Banco Inbursa and Inmobiliaria Carso, the companies owned by Slim, will in effect each supply $125m (£89m) in notes due in 2015, with warrants convertible into shares in a private financing arrangement with the beleaguered New York Times Company. The announcement last night confirmed speculation, widely reported yesterday, that the deal was in the offing.

The publisher, which owns the New York Times, the Boston Globe and a host of US local newspapers, said it would use the money to help refinance its existing debt although it will continue to look for other finance options.

In December, the company said it would not replace one of two $400m credit facilities, due to expire in May. It is exploring options to sell its New York headquarters and lease it back.

“The proceeds from this transaction will be used to refinance existing debt, including amounts currently borrowed under a revolving credit facility that matures in May 2009,” said Janet L Robinson, president and chief executive of the New York Times Company.

“We continue to explore other financing initiatives and are focused on reducing our total debt through the cash we generate from our businesses and the decisive steps we have taken to reduce costs, lower capital spending, decrease our dividend and rebalance our portfolio of assets.”

Forbes claims that Slim, who made his money in telecommunications, is the third richest man on the planet with a wealth of $49bn from a portfolio of companies in retail, construction, banking, insurance and a number of other industries.

In September, Slim bought a 6.4% stake in the New York Times Company for $128m (£73m).

Before the deal was announced yesterday, it was suggested that Slim would not gain representation on the NYT publisher’s board or be issued with shares that entitle him to special voting rights like those of the Sulzberger family, which has maintained control of the company for over a hundred years and has about 19% of its shares. However, when the warrants are exercised, Slim will become the largest shareholder in the company.

Source: The Guardian UK by Oliver Luft, 20.01.2009

Filed under: Data Vendor, Mexico, News, , , , ,

Carlos Slim’s Inbursa Bank Acquires Citigroup Banamex Shares in Mexico

The bank controlled by Carlos Slim Helu, the Mexican billionaire ranked as one of the world’s richest men, paid about $134 million to buy 26 million Mexico-traded shares of Citigroup Inc. over the past five trading days.
Grupo Financiero Inbursa SA’s brokerage unit purchased the Citigroup stake in a series of trades from Nov. 19 through today, according to exchange records, which don’t specify whether the transactions were on behalf of clients or for the bank’s account.
An Inbursa spokesman said the firm had no comment on the trades. The 26 million shares amount to less than 1 percent of the Citigroup’s stock.

Inbursa, based in Mexico City, bought 9.63 million shares on Nov. 20 as Citigroup fell 26 percent in New York to $4.71, sinking below $5 for the first time since 1994 on speculation the company might be forced to sell itself or split up. The stock rebounded 58 percent yesterday after the U.S. government announced a rescue plan, injecting $20 billion of cash and shielding the company from losses on some toxic assets.

The value of the net number of shares acquired by Inbursa was 1.78 billion pesos ($134.3 million), according to Bloomberg data. The Citigroup shares were purchased at an average price of 67.77 pesos apiece.
Citigroup rose 7 cents, or 1.2 percent, to $6.02 today a 3:34 p.m. in New York Stock Exchange composite trading.
Slim, 68, controls Inbursa, the bank and brokerage he formed in the 1960s. Citigroup, led by Chief Executive Officer Vikram andit, owns Grupo Financiero Banamex SA, the country’s second-largest lender.

Citigroup, the second-biggest U.S. bank by assets, paid $12.7 billion to acquire Banamex in 2001.
Mexican weekly newspaper El Semanario reported yesterday that Inbursa bought 40 million Citigroup shares over three days on the New York Stock Exchange, citing people involved in thepurchases it did not name. Slim vies with Berkshire Hathaway Inc. Chairman Warren Buffett for the title of world’s richest man according to Forbes magazine.

Source: Bloomberg, 25.11.2008

Filed under: Banking, Mexico, News, , , , , , , , , , , , , ,