Itau Sees ‘Huge Opportunity’ After Argentina’s October ElectionsBy and
Companies are more comfortable investing there, executive says
Bank weighs acquisitions after launching digital platform
Argentina’s comeback story has caught the eye of Itau Unibanco Holding SA.
Latin America’s biggest lender by market value has launched a digital platform in the nation to grow its retail business and is considering acquisitions and an expansion of its investment-banking and wealth-management businesses, Eduardo Vassimon, Itau’s wholesale general director, said in an interview at the bank’s headquarters in Sao Paulo.
“Argentina’s October elections indicated that the nation may have at least six more years of good management, making companies -- including us -- more comfortable to invest,” he said.
Reforms in Argentina helped boost confidence, Vassimon said. Since taking office in 2015, President Mauricio Macri has pushed to narrow the budget deficit and open up the economy. In December, he secured a win for that agenda with the approval of a pension bill just two months after elections in which his political alliance won gains in Congress.
“Argentina’s financial system is under-penetrated, which is a huge opportunity for us,” Vassimon said. Only 50 percent of Argentinians over 15 years old have a banking account, according to 2014 data from the World Bank, the latest available.
Itau is the 17th largest bank in Argentina, with 35 billion pesos ($1.8 billion) in assets as of August, according to the most recent data available from the nation’s central bank.
“We are doing very well in corporate and investment banking in Argentina, but we still do not have enough scale in retail banking,” Vassimon said. The bank “would be happy to analyze buying opportunities there, although digital banking offers us an alternative to grow in a different way.” He didn’t name potential acquisition targets, but said they may include fintechs.
Last year, Itau launched in Argentina a group of mobile apps and revamped its internet banking, promising companies and individuals fewer hurdles in handling day-to-day banking chores. Its new app for individuals, released in October, allows clients to recharge prepaid TV and public-transportation cards.
Itau is considering hiring another investment banker in Argentina for its equity capital markets team to cope with an increasing volume of deals, according to Roderick Greenlees, global head of investment banking.
Last year, the bank ranked second among equity underwriters in the nation, according to data compiled by Bloomberg. It was part of the sales team for some of the largest deals, including cement producer Loma Negra SA. Total issuance reached $5 billion, almost three times the volume in 2016, the data show. Itau was third among international corporate-bond underwriters.
Itau is deciding whether to expand in Argentina wealth management to take advantage of money flowing back into the country from an amnesty program for tax evaders.
“Wealth management has an enormous potential there,” Vassimon said.