Internationalization In The Banking Market And The Brazilian Institutions

Although the economic uncertainty in the international markets still inspire a careful approach, projects for the internationalization of certain Brazilian banks seem to be going on, as in the case of the recent acquisition by BTG Pactual of the leading broker in transaction volume in the Colombian market, Bolsa y Renta, preceded by the purchase of the Chilean CELFIN, which has operations in the markets of Peru and Colombia, or even the transfer to the Banco do Brasil of the corporate control of the American EuroBank.

Moreover, Banco do Brasil — historically present in various international markets — has been studying to move into the African market, in which the average profitability of banks is high and where, gradually, the number of Brazilian companies has been increasing along with the growing demand for banking services to attend the local population needs.

The internationalization movement in the banking market — involving, to a minor extent Brazilian institutions — is anchored in comparative advantages, as the expansion of the activities of domestic companies abroad evolves, based on a higher degree of specialization of institutions in certain products and banking and financial services. Furthermore, such institutions have the opportunity to encompass a broader spectrum of the consumer market with the geographical expansion of the performance of its services. Additionally, in certain markets, the institutions may profit from the openness of the business environment, in view of less rigid legal, fiscal and regulatory frameworks.

In the case of Brazilian institutions, it is worth mentioning that the operational robustness entailed by the set of prudential norms in place in the local market coupled with a close supervision performed by the Central Bank (upon setting up the expected risk management standards), combined with the excellence in the back-office and IT structures plus the significant ROE, provide the necessary conditions that made possible some of the expansion moves towards the international markets that have been recently seen.

Among the examples in the Brazilian banking market, one can identify some alignment of purposes, that is to say that some Brazilian banks have followed the spread of Brazilian companies activities abroad, with a view to meet such companies' capital needs, as well as in connection with placements in the overseas capital markets.

Additionally, the opportunities offered by the relevant Brazilian...