Q&A ARGENTINA
enter the market, but as you can gather, it has not been such a good expe- rience and we are not developing any new business for the moment.
Because of foreign currency controls by the central bank, it is hard for
Argentines to make international loans in US dollars. Restrictions are so tight that it’s difficult even for a company that has funds to make payments on time. I just wanted to give an example on the challenges of doing business in Latin America and Argentina is not really an important market for us at the moment. Right now, we see opportunities in the strategic markets of Peru, Colombia and Mexico.
These are all growing countries, stable on the fiscal side, on the legal side,
and on the regulatory side. They are very competitive markets that have been growing consistently for the last several years, and growing the most in Latin America in general – much more so than Brazil, which is a huge economy but difficult to do business with.
What is the problem in Brazil? Brazil is so protective, and since we finance trade transactions, the very high import taxes are a barrier to our financing programs. And it’s difficult be- cause we can only finance the trade finance portion and not the local taxes and duties which represent an important percentage of the whole trade transaction in Brazil. It’s quite hard for a foreign bank to be financing import transactions in Brazil that are insured by the US government export pro- grams.
It’s a huge economy, and we’ve heard so many good things about Brazil,
about its growth, offshore drilling, the World Cup, the Olympics, infra- structure projects and so on. But it’s a country that grew less than one per- cent in 2012. Look at the relative growth of Peru. Peru has been consistently growing above 5 percent, and the same thing happening in Colombia with sustained growth last year, and the country was just upgraded by S&P early this week. Mexico is also a country that is a huge trade partner of the US and the natural market for trade finance transactions for US-based banks.
Are there any regulatory challenges there? You don’t need to have a presence in Mexico for doing business there, but regulation prohibit sending debt or payment instruments and currency equivalents by mail without declaring it to the authorities. Let’s say a client in Mexico wants to send a Promissory Note to a bank in the US as a debt instrument of a trade transactions to be funded the following day and the
Diogo Figueiroa Vice President and Head of Trade Finance
Espirito Santo Bank Miami, USA
It’s a small detail for doing business there, but each country has its own
specific challenges and that’s why, on an international trade transaction, it’s important to make sure that the customers have a good character, with a good reputation, because the smallest detail, with the wrong mind on the other side, can harm a transaction.
Argentina’s problems with foreign lenders are well known. How have you responded? Reducing the volume of loans to Argentina, it’s not exactly what we’d prefer; I can’t measure exactly, but let’s just say that we are not promoting new loans to the country at this time. We keep working with existing customers, but it’s not a strategic market for us.
Regarding recent events in Venezuela, is the passing of Chavez likely to result in a change in your strategies in the region? Possibly not. If the same political direction keeps up for this type of cross- border transaction, I think we, on the lending perspective of a US based Bank, will keep the same approach and will not have any type of cross-bor- der transaction with the country. However, if there is a political change, I really see a tremendous opportunity there. There are a lot of resources in the country that can support a lot of growth, imports of capital goods, in- frastructure investments and so on. It would definitely be a tremendous op- portunity. But according to what I’ve been seeing, it doesn’t seem likely to happen soon.
“ About the author
Diogo Figueiroa is Vice President and Head of Trade Finance at Espirito Santo Bank. He is personally responsible for running the bank’s trade finance team, originating and structuring export finance transactions for companies throughout Latin America and the Caribbean, and working from day to day with export credit agencies and banks to close revolving credit facilities, medium term loans, factoring facilities, and other deals. Figueiroa worked in the international division of Banco Espirito Santo in Portugal before coming to the United States.
We need counsel that protects the interests of the bank but at the same time keeps a pro- business attitude
Note get confiscated at customs this can create can undermine the transac- tion. This example is to show that procedures and regulations are, of course, different in each country.
ENERGY & INFRASTRUCTURE | LATIN AMERICA 2013 27
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