Mixed opportunities in Latin America: HSBC - Latin America - Hong Kong and Shanghai Banking Corp

Business Asia, Oct, 2002

Latin America continues to provide mixed opportunities for Australian traders, HSBC Australia head of corporate banking Tim Slater says.

Slater said while countries such as Mexico and Brazil could prove to be lucrative for local exporters, others markets, particularly Argentina, were still in dire straits.

"The economies have gone through a difficult period," he said.

"We think the Mexican economy will be strong. It will be, and to some extent it already is, a manufacturing centre for the US.

"Brazil has stood up reasonably well, and they have had limited contagion from the dire problems in Argentina.

"In Argentina, the government has almost ruined the banking sector. There's some stability now, but I don't think we would say that Argentina is on the road to recovery."

US Impact

Slater says the health of the US economy would have an enormous impact on those in Latin America, particularly as the US was the region's major trading partner.

"The key driver for the Mexican economy will be the US increasingly. America will come out, not so much its recession but catharsis, and you expect Mexico to benefit from that," he said.

"We can't get away from the fact that the US is the world's largest economy--when the US economy sneezes, there is the impact on the others".

Greater presence

HSBC is about to significantly increase its presence in Latin America, with plans to buy Mexico's fifth largest bank, Grupo Financiero Bital SA, well in motion.

Bital, with 1400 branches, six million customers and 12.5 per cent of the Mexican market, will be HSBC's biggest branch network outside of Europe once the transaction is completed.

Slater says the purchase of the Bital (for US$1.14 billion) will be a massive bonus for traders as HSBC can now seamlessly facilitate trade throughout all of the Americas.

"Because we have offices there (Latin America) I think we understand the risk and gauge it better and more accurately," he said.

"One of the ways we can help is with information. It's a value added service that's difficult to provide through a correspondent banking relationship."

HSBC IN LATIN AMERICA

Panama      HSBC Bank USA            16 Offices
Argentina   HSBC Bank Argentina      226 Offices
Brazil      HSBC Bank Brazil         1632 Offices
Chile       HSBC Bank USA            2 Offices
Uraguay     HSBC Bank (Uraguay) SA   4 Offices
Venezuela   HSBC Bank PLC            1 Representative office
Mexico *    HSBC Bank Mexico SA      3 Offices

* acquiring Grupo Financiero Bital