The Strongest Gain Market Share_Valor Economico Newspaper
Citi starts at the front, but Santander, HSBC, Sumitomo and Société also stand out in an increasingly hard difficult market.
By Cristiane Perini Lucchesi from São Paulo
The credit and solvency crisis being experienced by the international finance system, whose proportions have never been seen before, spoiled the celebration of Brazil’s dollar liquidity upgrade to investment grade. However, banks which lost less took advantage of the still strong first semester of 2008 to help companies and the Brazilian government to raise foreign currency resources through debt. Because of a weaker competition, institutions less hit by the crisis gained a market share.
The Citigroup managed to keep its aggressiveness in the first semester of the past year and was ranked in first for the third time in the “Ranking of Foreign Fund Raising from Valor Economico Newspaper”. The overall amount of transactions carried out by the financial institution for Brazil was of US$ 6.083 billion, and so the bank climbed five positions in the ranking as compared to 2007. The U.S. bank left no room for anybody else: it also got the first position in two major sub-rankings: “Bonus”’ and “Loans”. Citi was also the first in other three sub-rankings: “Corporate Bonus”, “Corporate Bonus to the financial sector” (first position shared with Morgan Stanley) and “Loans to private corporations”.
It was only after the collapse of Lehman Brothers on September 15 that Citi’s situation grew worse. The institution needed a US$ 50 billion help from the government and ended under the control of the United States Treasury. Nevertheless, the bank says that nothing will change in its operations of fund raising in the international market for Brazil.
Santander, already including transactions leaded by ABN AMRO, was ranked in second in the general ranking, as it headed transactions in a total of US$ 4.361 billion. However, it was the first in number of transactions: ahead of 16 Foreign Fund Raising operations for Brazil. The Spanish capital bank – one of the very rare to achieve a growth of 9.4% in overall profits in 2008, whose amount jumped to US$ 8.88 billion, and which purchased ABN in 2007 – also got the first position in sub-rankings of “Corporate bonus to non-financial sector” and “Corporate bonus to private corporations”. In loans, Santander was the bank which had more umbrella transactions (with the participation of a multilateral organism).
Because of the shortage of banking credit, umbrella loans gained a growing importance in the Foreign Fund Raising market and that’s why Valor Economico Newspaper decided to issue a specific ranking for the banks which had an outstanding performance in these transactions. In the umbrella loan, called A/B loan in the foreign market, a multilateral entity – such as the Interamerican Development Bank (BID), the World Bank or Confederación Andina de Fomento (Caf) – is the official creditor for all the transaction, but spends only a part of the line in the so-called A loan. The banks provide a B loan, which has another term and cost. As they are preferential creditors, the first to receive in case of moratorium, the multilateral entities decrease the risk and the need of capital for the participating banks.
For the first time since the ranking was first published in an issue of February 2002, HSBC was ranked in third among the three first in the “Ranking of Foreign Fund Raising Value”. The British bank – headed by Marcelo Marangon, who left Citi in the half of last year exactly because of his market aggressiveness – has not so far needed government’s help and managed to release a total of US$ 3.45 billion in transactions for the country.
Sumitomo Mitsui, the bank ranked in fourth, is also noteworthy. The bank went up eighteen positions in the “Ranking of Foreign Fund Raising Value” leading a total of US$ 3.304 billion in loans for Brazil, five folds more than the US$ 660 million achieved in 2007. The financial institution further gained the first position in two important sub-rankings: 1) “Loans to the public sector”, with important transactions with Metrô de São Paulo and Companhia Paulista de Trens Metropolitanos (CPTM), and 2) “ECA credits or loans”, i.e. loans provided under the guarantee of the Export Credit Agencies, governmental agencies which provide long term financing to other countries to import equipment manufactured by its countries. The ECAs also actuate contributing for the financing of strategic investments for its countries. Valor Economico Newspaperhas created this new ranking, as these agencies became more aggressive. They want to enhance the exports from their countries in a retracting international market. Their rates became more competitive in view of the strong push in to banking spreads.
Another bank which deserves to be mentioned is the French Société Générale which climbed up twelve positions in the “Ranking of Foreign Fund Raising Value” and was ranked in fifth because of a total of US$ 3.2715 billion in transactions, almost three times more than the results of the last year. The bank was ahead of emblematic transactions, such as the US$ 525 million loan to TAM to finance the import of four Boeing airplanes, a financial leasing insured by Ex-Im Bank, an export credit agency of the U.S. government. This is the type of structure which brings relief for the private banks to have a share in the present market, as it has double guarantees: the asset itself and the U.S. government ECA.
The also French Calyon was ranked in sixth. The Spanish BBVA was ranked in seventh and it was the one which went up more positions: it climbed 27 steps in the ranking from a year to the other. The banks Mizuho, Sumitomo Mitsui and Tokyo-Mitsubishi achieved the highlight in the ranking of “Operations in Euros and Yens”, which this year included two transactions only: one of them in the amount of US$ 750 million for Petrobrás, leaded by the three large Japanese financial institutions.
With the investment grade rated by three credit risk classification agencies, Usiminas was the Brazilian company which raised more funds in the international market last year. It raised a total of US$ 2.25 billion in market transactions. This year, the company is still able to take part in innovating transactions: it already achieved US$ 610 million. Now, the National Bank for Economic and Social Development (BNDES) was the greatest bond issuer as it made its first launch of euro-bonus in seven years, which totalized US$ 1 billion and occurred just after the country got the second investment grade.
Brazil raised a total of US$ 22.9 billion in bonds and loans in the international market last year with the participation of more than one bank, the smallest amount since the US$ 19.1 billion achieved in 2004. Comparing with the US$ 25.981 billion obtained in 2007, when the market was flooded with credit, the drop was of 36%.
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