Latin Finance - November/December 2009 - 35

2009 Best Local Investment Bank – Itaú BBA Brazil taú BBA’s expansion has happened at a steady clip over the past four years, and the shop poses an increasing threat to global powerhouses hoping to grab a slice of the Brazilian investment bank fee pool. Unlike many European and US shops that seem to waver between strong years and others marked by departures and patchy performance, the Brazilian player has improved consistently. While that may be a function of initially limited scope and the fact it is part of the Brazil’s biggest retail and commercial banking powerhouse, Itaú BBA’s progress – backed by results – inspires awe in competitors and confidence from clients. The past 12 months saw a bona fide push into cross border DCM, a move that was, in classic Itaú fashion, announced and promptly executed. “The first stage [of our recent expansion] was to close a product gap we had in terms of international bond distribution,” says Jean-Marc Etlin, head of Itaú BBA. Indeed, where there was a gap, there is now a growing and highly competitive platform. A Brazil-based fixed income team poach from Deutsche Bank in March of 2008 was followed by the installment of a New York-based distribution platform with executives from UBS and Deutsche in the first quarter of this year. By early April, the shop had clinched a joint-lead role on a $200 million 2014 bond for Odebrecht and within a week, it appeared among co-leads on a $750 million 10-year issue for Telemar. But while it is tacking on new capabilities, Itaú BBA has not stopped tweaking its leading Brazilian equity product, from research through IPO execution. A strong origination effort from the start helped Itaú capture a substantial piece of the market via IPOs and critical deals like Gerdau’s 2008 follow-on, as Global Buildout Proceeds I well as leading roles in jumbo trades for Vale, VisaNet and Redecard. It is now focused on polishing sales and trading, which it tries to deliver on an integrated basis in Brazil and throughout global distribution offices in New York, London, Dubai, Hong Kong and Tokyo. “The goal is to offer our investor clients LatAm coverage and trading, and enter that fee pool,” says Etlin. To bolster this effort, Itaú BBA poached two Credit Suisse equities specialists in September. Chris Egan, a São Paulo-based MD at Credit Suisse in charge of the Brazil shop’s international sales and trading effort, will become global head of equities, reporting to Etlin. And reporting to Egan out of New York is Kevin Hard, former head of Credit Suisse’s international sales and trading desk, who was tapped to lead international equities distribution. The equity buildout includes plans to cover other LatAm markets. “We’re hiring analysts to cover other countries in the region,” says Etlin, referring mainly to Mexico, Argentina and Chile. “By the first quarter of 2010 we should have good Brazil coverage and reasonable coverage in LatAm.” LF earnings due to the sharp macro downturn, which in turn greatly reduces the pool of eligible credit consumers. Fitch also cites lower interest rates that slash net interest incomes, as well as new regulations requiring financial institutions to set aside more reserves that will “further pressure banks’ financials amid a period of already very weak performance.” Additionally, problems at home for a number of foreign-owned banks have trickled into Mexico, leading majors like Banamex and Santander to stagnate in some parts of the market. But where there are losers, there are also winners. BBVA Bancomer has emerged as a clear leader after wrestling with Banamex for years. “In recent years, Bancomer has gained volume, it has gained size and it’s a bank that has maintained its very solid strengths,” says David Olivares, an analyst at Moody’s who tracks the Mexican banking sector. Best Bank – BBVA Bancomer Mexico Capitalizing on Crisis S ince the collapse of Lehman, Mexican authorities have come out repeatedly to defend their nation’s banking system as competitive, profitable and well capitalized. And for the most part, Mexican banks have indeed maintained a comparatively solid footing despite the nation’s deepest recession in decades and job losses that will likely surpass 1 million in the formal sector alone this year. But while Mexican banks turned out to be healthier than their US counterparts, the recession is still causing plenty of pain. In a late September report, Fitch says the outlook for Mexican banks has rapidly worsened in recent months. The agency predicts deteriorating Banking on swift recovery: Ávila He notes that Bancomer’s financial strength rating of C+ is the highest for any bank in Mexico. “The bank is well capitalized, very profitable, very liquid . . . and we could say that in recent months or in the last year during the crisis Bancomer has been one of the winning banks and has benefitted from the crisis,” Olivares says. He attributes Bancomer’s gain in market share to the bank’s ability to recognize losses and clean them off the November/December 2009 LatinFinance 35

Latin Finance - November/December 2009

Table of Contents for the Digital Edition of Latin Finance - November/December 2009