In this issue, we explore how banks have fared during the COVID-19 pandemic in Latin America and the Caribbean, a crisis that could have pushed a few to collapse — or the brink.
That didn’t happen.
It was a valid concern. Central banks and governments stepped in with strong support for — and demands on — the banking sector to keep it from buckling like in the many crises that have slammed the region over the decades. The memories are still fresh for some. In Argentina, bank accounts were frozen during a 2001-02 economic crisis, costing people a chunk of their savings after the currency slumped.
Oddly, this rocky history has a positive side. Banks have learned how to respond in hard times, and that’s what they did during the pandemic with prudent strategies that allowed them to quickly return to growth. Rodrigo Amaral explores how in our cover story. He also looks at how banks sped up their digitalization efforts during the lockdown, putting them on better footing to compete with their fast-growing digital rivals.
Banks still face many challenges. Ivan Canu captures this on the cover, while Vinod Sreeharsa investigates how digital banks are eating into the traditional banking business in Brazil. Another challenge — and opportunity — is climate change. Rodrigo Alonso Cruz and I dive into how banks can finance the green transition, while Thierry Ogier interviews Ricardo Guimarães to find out how his bank, the Brazilian branch of BNP Paribas, is helping clients in the transition. He also interviews Brazilian Infrastructure Minister Tarcísio Gomes de Freitas, aka Thor, on how new infrastructure bonds and project finance may help hammer out much-needed public works projects.
Hernán Goicochea and I look at the impact of rising global inflation and interest rates on the strategies of sovereign bond investors, as well as the region’s economies, people’s moods and, hence, the prospects for political change. How to invest? Cautiously, for now. And with an eye open for any high-yielding alternatives (inflation-linked bonds, perhaps). Tom Azzopardi looks at Chile’s seemingly dashed hopes to become a financial hub for Latin America.
We also had a new set of awards to hand out that shows how banks are building back from the pandemic. You can check out the stories from the winners of our 2021 Banks of the Year Awards.
So, what does the future look like for the banking sector?
It will be competitive, that’s for sure. And more focus will be put on the environment and sustainability, including the silent world. Kevin Bender, senior director of sustainable debt at The Nature Conservatory, takes us into the newer field of blue finance in our Parting Shot section.
Best wishes, happy holidays and thank you to our loyal subscribers, old and new, who continue to support the independent journalism at LatinFinance.
Be well, stay well and keep reading,