"Investment Banking in the Andean region gathers momentum based on a positive economic outlook" December 10, 2012
"Investment Banking in the Andean region gathers momentum based on a positive economic outlook"
Vicente de Ortueta is responsible for the distribution of investment banking products for companies in Spain and Portugal and the Andean region. In this region, BBVA has just launched a new phase of an ambitious project to give access to financing tools and advisory services, that were traditionally reserved for large international companies, to medium-sized and large companies, with whom the Group has an excellent relationship.
Q: You have launched a plan for the sale of investment banking products in the Andean region…
Given the excellent product capacity of BBVA Corporate & Investment Banking and BBVA Group's deep relationship with the medium and large companies in all countries where we operate, we have decided to provide them with financial solutions so they can access financing tools or advisory services that have traditionally been reserved for more sophisticated clients. We talk about all kind of products, being them balance products, like syndicated loans or structured finance products, disintermediation like bond origination, or advisory, like Corporate Finance and Equity.
This model has been implemented with great success in Spain, Mexico and the U.S. and now we want to go to the Andean region. Colombia, Peru and Chile, where the Group has a significant presence, are going through a time of macroeconomic stability and high growth potential. We refer to the robust GDP growth, strong private consumption and investment, controlled inflation and improving labour market, all of which allow the development and growth of investment banking products.
Q: With economic times so positive, what business prospects do you have? What types of products are expected to be the most demanded?
The expected economic growth makes possible a steady development of investment banking products, even among customers that are not familiar with them. With regard to products, it is necessary to differentiate among the three countries. For example, in Chile, there is a great development of Global Lending products, such us project finance and syndicated loans. There is also great potential demand for products of Corporate Finance, Mergers and Acquisitions primarily. We must take into account the development of the three major sectors of Chile: mining, energy and infrastructure. We hope that in the next three years medium and large companies will make investments worth $ 32.835 MM, of which $ 16.500 MM correspond to mining, $ 13,500 MM to energy and $ 12.835 MM to infrastructures.
In Peru, most of the activity will be linked to Project Finance, Structured Bilateral Loans and Club Deals. We also expect opportunities in M&A. Both operations types, advisory and balance, will focus on manufacturing, infrastructure / construction, education, health, mining, oil / energy and agribusiness.
Finally, Colombia is seeing some business reorganizations that represent great opportunities for M&A transactions. The infrastructure deficit and efforts made by the government in this regard also represent opportunities for the bank in Global Lending products.
Q: You said you have already implemented similar projects in other geographies. How was the experience?
BIBEC Andino is the latest project to join the global project, which began six years ago in Spain and Portugal, three years later in Mexico, and two years ago it began in Compass, in the United States. If we add to our presence in those geographies the bank agreements in China and Turkey, the result is a set of markets in which we can proactively and systematically accompany companies in their expansion and internationalization processes.
The case of Spain and Portugal is a mature project that has proven effective at different times of the cycle. In both years of growth as in the current recession, BIBEC assumes a role in delivering proactive solutions through the origination of balance and advisory services.