UBS Said to Be Among Banks Weighing Argentina Wealth Management

  • Julius Baer, BTG also said to be considering new businesses
  • BNP Paribas estimates tax amnesty could attract $16 billion

UBS Group AG, Julius Baer Group Ltd. and Grupo BTG Pactual are among banks considering a local wealth-management business in Argentina, people familiar with the matter said, as one estimate predicts the government’s tax-amnesty program could bring as much as $16 billion in offshore money back to the nation.

UBS and Julius Baer, both based in Zurich, might acquire local brokerages as a way to speed up the licensing process, according to one of the people, who asked not to be identified discussing private strategies. Sao Paulo-based BTG transferred one of its partners, Marcelo Fiorellini, to Argentina about six months ago because the bank believes the nation’s capital markets are set to expand, the company said in an e-mail, declining to comment further. 

The government’s tax-amnesty program, announced in May, attracted $4.6 billion in cash through last week, Finance Minister Alfonso Prat-Gay said Monday. About 100,000 Argentines declared hidden holdings to tax authorities as of Oct. 26, with 58,000 making deposits in bank accounts, Prat-Gay said. Some wealthy Argentines are creating local family offices to manage their assets, betting that President Mauricio Macri will continue to be more investor-friendly than previous administrations and that the economy will resume growth with lower inflation.

“The success of the tax-amnesty program isn’t going unnoticed by the asset-management industry,” Carlos Aszpis, an analyst at Buenos Aires-based brokerage Schweber Securities SA, said in an interview. “It would make sense for big international banks and local brokerages to try to get a piece of all that money,” he said, adding that investors will also be lured by higher returns in Argentina compared with some other countries.

BNP Paribas SA, which already has an asset-management business in Argentina, estimated that tax amnesty could bring in $16 billion in offshore money. That would almost double the size of the local mutual fund industry, which in August had 298.7 billion pesos ($20 billion) in assets under management, according to Camara Argentina de Fondos Comunes de Inversion, an industry trade group.

BNP is considering expanding its asset-management business to capitalize on the growth, one of the people said. Officials at BNP, UBS and Julius Baer declined to comment on their plans for Argentina.

Closed-End Funds

One corner of the asset-management industry is already showing signs of revival. Closed-end mutual funds -- all but non-existent in Argentina during the past two decades -- are suddenly hot again, with at least six firms saying they’re hiring specialists to structure the funds and analysts to scout for projects.

For the local fund industry to grow, Macri will have to overcome lingering mistrust of Argentine authorities. When the nation defaulted on its debt in 2001, the government restricted bank withdrawals and converted people’s dollar savings into pesos amid a local currency collapse of as much as 75 percent.

Argentines held approximately $400 billion in offshore assets in 2012, according to calculations by the Economic and Financial Center for the Development of Argentina. That number is likely to have increased to $500 billion, according to Jorge Gaggero, founder of the Tax Justice Network for Latin America and the Caribbean.

BNP expects the amnesty program to eventually prompt citizens to declare savings worth roughly 8 percent of the nation’s gross domestic product, the Paris-based bank said in a report published Aug. 2. Argentina’s GDP is about $583 billion, according to data compiled by Bloomberg.

Under the tax amnesty program, Argentines who come clean on their untaxed savings by March 31 will pay a one-time fine of as much as 15 percent. They can also invest in three-year and six-year Treasury bonds or make long-term investments in businesses or closed-end mutual funds.

UBS Group AG is the world’s largest wealth manager with $1.7 trillion under management for affluent individuals and families, according to London-based consultancy Scorpio Partnership. Julius Baer Group Ltd. ranked 11th with $298 billion, the report in July said.

— With assistance by Giles Broom, Jan-Henrik Foerster, Charlie Devereux, and Neil Callanan

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