Several reports this week suggest that both Banco Bilbao Vizcayo Argentaria and Banco Santander Central Hispano have become increasingly concerned over prospects in several Latin American countries. Reports suggest:
BBVA has put on hold its plan to buy out minorities in the Argentinean Banco Frances
BBVA has also frozen plans to increase its stake in Bancomer of Mexico
BSCH is considering merging Banco do Estado de Sao Paulo (Banespa) and Banco Meridional to reduce costs
BSCH is considering merging Banco Serfin and Banco Santander within Mexico
Many Latin American countries have governments sensitive to any increases in unemployment and expenditure cuts and additional merging will not be popular. There has been considerable unrest in Argentina already following job cuts in other sectors by foreign companies. Jobs were also a very sensitive issue during the privatisation of Banespa last year.
On the other hand the banks will not be able to gain sensible ROFE figures without this action. Earlier this week BSCH announced it planned to cut the cost:income ratio by 8 points within 2 years. This would seem impossible without major reform in Latin America.
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