LATIN AMERICA

The economies of Brazil and Mexico rank among the 20 largest in the world.

Brazil’s $1,900bn economy sits ninth in a list of countries by gross domestic product (GDP) and Mexico’s $1,320bn economy places it 15th in the same table.

There is, however, a large gap between the big two and the mid-sized Latin American economies – Argentina, Colombia, Chile and Peru – that follow them. Argentina’s GDP is $443bn, while Peru’s is $240bn.

When it comes to banking, everything is different. A glance at the scores tab of Latam countries by Tier 1 capital, 2000-2019, puts Brazil way out in front, a position it has held over the 20-year period during which we have full data sets, and most probably the entire 50 years since the global banks’ ranking was created in 1970.

In 2000, with a total Tier 1 of $20bn, Brazil’s banks were comfortably ahead of their rivals. In 2019, with $120bn – six times more capital – Brazil is still head and shoulders above the rest.

On the rank tab, a straight red line shows the same consistent strength for Brazil but with Mexican banks in fourth place, despite Mexico having the second largest economy. Mexican banks were in second place back in 2000 – even after the peso crisis of 1994 – but they have since been overtaken by Chile and Colombia, which place third and fourth respectively.

The economic woes that have befallen Argentina – before which its banks occupied second place in the early to mid-2000s – means it now languishes in sixth spot.

Also of note in these tables is outperformance by two countries with large international or offshore banking sectors – Puerto Rico in fifth place despite its recent debt crisis and Panama in seventh place even though its $73bn economy makes it about one-third the size of Peru’s, the country above it in the table.

"Mexican banks were in second place back in 2000 – even after the peso crisis of 1994 – but they have since been overtaken by Chile and Colombia"

In the top 10 Latam banks by Tier 1 capital, 2000-2019, the large Brazilian lenders hold the top four places with private sector players, Itau Unibanco and Bradesco, in first and third places respectively. Public sector commercial bank Banco do Brasil is second, and state-owned savings bank Caixa Economica Federal is fourth.

Puerto Rico’s Popular, in ninth position, has performed impressively for a bank from the unincorporated US territory, and has come through the island’s recent troubles – debt default and the impact of Hurricane Maria – in reasonably good shape.

The big Mexican players, Banorte and Inbursa, are sixth and 10th respectively. Banorte has never fallen below eighth in the period under review, while Inbursa was as high as sixth back in 2000.

Colombia’s Bancolombia is in fifth place, while Chilean banks Banco de Credito e Inversiones and Banco de Chile place seventh and eighth. The former fell to 10th position between 2012 and 2015 and Banco de Chile dropped out of the top 10 altogether for a couple of years.

"Puerto Rico’s Popular... has come through the island’s recent troubles – debt default and the impact of Hurricane Maria – in reasonably good shape"

Top 1000 World Banks:
Latam banking's boom and bust

BNY Mellon's head of treasury services for Latin America, Dino Sani, talks to Silvia Pavoni about the evolution of the banking industry over the past two decades, the growth of regional giants, and how technology will shape competition in the future.

2020 Results

Brazilian banks solidify lead at the top.

While Latin America braces itself for the economic impact of Covid-19 in the second half of 2020, its banks entered the year in relatively good shape. Top lenders across the region are well capitalised, as shown by their capital adequacy ratios as observed by The Banker Database. This is set to help them absorb the inevitable souring of corporate and retail loans and lower activity in other divisions.

In terms of size, the Brazilian names that traditionally lead the Tier 1 capital regional ranking are still firmly at the top: Itau Unibanco, Banco Bradesco, Banco do Brasil and Caixa Economica Federal. After a 30.89% Tier 1 capital expansion, BTG Pactual has jumped three positions to ninth place in the regional ranking. Other Brazilian banks have grown noticeably: smaller lenders Banco BMG, which has more than doubled its Tier 1 capital – the largest expansion in the region – and Banco do Nordeste do Brasil, which has boosted its Tier 1 capital by over a third. 

Mexico’s BanCoppel is the third most improved by this metric and is the only new Latin American name in the global Top 1000 ranking.

Mexico’s largest bank, Grupo Financiero Banorte, has also expanded its Tier 1 capital by a good margin, moving up one place in the regional ranking to replace Bancolombia in fifth position.

Among the highest movers is Banco Popular Dominicano, from the Dominican Republic, the only Caribbean bank present in that table.

Top 1000 World Banks 2020 Latam

Latin America's largest banks show strength, led by the Brazilian names that traditionally dominate the region. Among them, BTG Pactual displays the best performance ratios. Silvia Pavoni highlights the key results for Brazil, Mexico and Colombia in the 2020 ranking.

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