Brazil Bank Taking Lead for Corp Governance

The big 2 Brazilian banks are in dead heat for winner of the region’s best financial institution for corporate governance. But one is inching into the lead. Itau and Bradesco get the same overall top score in this year’s LatinFinance study in association with Madrid-based consultancy Management & Excellence (M&E). Bradesco and Itau have used CSR, sustainability and CG as battlegrounds since the turn of the century. Both are very sophisticated, but Bradesco seems faster to advance. “Bradesco is probably the most sustainable bank,” says William Cox, managing director at M&E. “Itau is going to slip next year – they are just too slow.” M&E notes sustainability as a strategic priority at all levels for Bradesco, as well as technical sophistication, excellence in operations, a culture of quality control, quick decision-making, fast implementation of technical and strategic innovations, rapid globalization in IR, consolidating CSR programs, and broad geographic representation in Brazil. Among weaknesses is the risk of overly burdensome CSR, which weighs on costs. According to a recent Citi report, LatAm investors will pay a 22% premium on average for an investment with good governance. M&E also sees significant potential for BCI Chile, which has strong internal risk control systems, improving returns, a broadening client base, modern corporate governance, and solid growth. However, the fact that it offers outdated information in English limits its reach to global investors. For full report, go to www.latinfinance.com/banks08