Bank of America Merrill Lynch Publishes Report on Latin America Market
Strategic Treasury for Latin America 2013 Authored by Global Transaction
Services Identifies Opportunities, Challenges and Variations Companies May
Encounter When Doing Business in the Region; Chile Characterized as Attractive
Business Location in Light of Its Investment Grade Credit Rating and Stable
NEW YORK -- August 27, 2013
The Global Transaction Services business at Bank of America Merrill Lynch has
published the report, Strategic Treasury for Latin America 2013, which
currently appears in Treasury Management International (TMI) magazine. The
report, which is produced annually, identifies the opportunities, challenges
and market variations that companies may encounter when doing business in the
“To outside companies looking to expand internationally, Latin America is a
land of opportunity,” states Juan Pablo Cuevas, head of Global Transaction
Services for Latin American and the Caribbean, in the introduction of the
report. Cuevas explains that despite recent events in Brazil, “by and large,
the political instability that was once inherent in the region has given way
to longer-term governments and longer-term planning as the region’s economies
continue to grow.”
Strategic Treasury for Latin America 2013, which is available to BofA Merrill
clients and through TMI, features articles on wide-ranging treasury and
transaction services issues, including:
*The most attractive opportunities for trade and investment in Latin
*The most suitable countries for establishing shared service centers.
*Implications of the Pacific Alliance and the Integrated Latin America
*How treasurers can more effectively leverage their technology, including
*The advantage for treasury departments to work with a banking provider
that can relay real-time information on their cash and securities
*How treasurers can optimize liquidity management in the region.
*Best practices on the part of Latin America companies to allocate at least
a portion of their liquidity to USD-denominated products.
*How the conditions in Latin America are ripe for more widespread use of
*How multinationals, eager to take advantage of the opportunities in Brazil
and Mexico, are seeking to increase investment and activity in both
In the article, “Navigating Latin America’s Liquidity Landscape,” the bank
provides country-by-country profiles on liquidity conditions. Mexico is noted
for being more liberal where liquidity management is concerned, while Chile is
singled out as “an attractive business location for international corporations
in light of its investment grade credit rating and stable democratic
The attractiveness of Latin America as a location for shared service centers
is explored in “Bienvenidos a Latin America,” where the following
characteristics are identified:
*Economic and political stability, which are a key to cost-effective
investment, although there are some exceptions within the region.
*The region’s proximity to and cultural affinity with the U.S., and that
its time zones mirror that of the U.S., avoiding the need to establish
*Costs for real estate, wages and infrastructure in most countries are
significantly lower than in the U.S. and in some cases lower than in parts
of Eastern Europe and Asia.
The article, “Entering Latin America: Knowledge Is Power,” discusses
prerequisites for companies expanding into the region. They include the need
*Consult with legal, tax, regulatory and accounting advisors to discuss
requirements for setting up operations in the region.
*Consult with banks to better understand what can and cannot be done in a
particular market in order to determine if the company’s goals are
achievable or not.
*Establish visibility of accounts to achieve a true understanding of the
company’s cash position.
*Understand regulatory obstacles. For example, in Chile and Colombia,
foreign exchange restrictions prevent companies from making foreign
currency payments out of those countries.
“Latin America Rising for Trade and Investment” compares the relative
investment opportunities of the region’s economies and discusses drivers of
growth. Notable data points include:
*In 2012, Latin America showed the highest growth in FDI amongst any
region. And within the region, Chile saw the largest increase.^1
*While investments in Brazil and Mexico tend to be broader based,
investment in other countries tends to be focused with Peru concentrated
in communications and mining (more than 50 percent of FDI), Colombia in
oil and mining (more than 74 percent) and record investment in Chile in
mining and services (75 percent).
*The economies of Chile, Colombia and Peru grew at rates of 5.6 percent, 4
percent and 6.3 percent respectively in 2012.
“Bank of America Merrill Lynch is committed to supporting our clients’
continued development within Latin America,” said Cuevas. “We hope this report
goes some way to helping companies understand the nature of the Latin America
market so that they can take advantage of the region’s increasingly attractive
opportunities,” he concluded.
^1 United Nations Conference on Trade and Development (UNCTAD). Page 10 of
“Strategic Treasury for Latin America”
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