Citi has confirmed it is to exit retail banking in Brazil, Colombia and Argentina in a further round of retrenchment from the region – with these latest three joining six other regional businesses sold in the past two years.
The departure from Argentina, just as the Macri administration is starting to dismantle economic controls and liberalise the financial system is more of a surprise to analysts than the bank’s decision to leave Brazil where, on top of the country’s deepening recession – GDP contracted by more than 4% in 2015 and is expected to fall by more than 3% this year – international banks have struggled to make retail banking operations profitable.
Sergio Furio, BankFacil HSBC recently sold its retail bank in Brazil to Bradesco; Société Générale has sold its consumer businesses; and even the relatively large Santander Brasil continues to be unable to match the locals’ level of profitability.
The concentration of Brazil’s banking market was further illustrated shortly before Citi’s decision when a consortium of Banco do Brasil, Bradesco, Caixa Economica, Itaú and Santander announced the creation of a credit intelligence bureau to pool credit information. That move was preceded by a ruling from the state of Sao Paulo constraining credit agency Serasa Experian from reporting on a large amount of delinquency data.
“The ruling in effect means that Serasa can only report 3% of NPLs in the state – which accounts for 30% of the country’s credit market,”says Sergio Furio, founder and chief executive of BankFacil, a financial services start-up that helps consumers searching for financial products. “That decision will reduce transparency and increase the price of credit in the country’s largest market.”
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