Latin America has established itself as a magnet for fintech investment.

The region received $15.6 billion in investments for financial technology providers over the past 10 years, with Brazilian companies making up 66.7% of the total, according to consultant Distrito’s Fintech Report 2024. Digital services—e-wallets, accounts, and digital banks—attracted the most money, with $5.3 billion. But the most numerous deals, and those most often targeted for acquisitions, were in credit fintech, with 477 reported.

“The region has a large unbanked or underbanked population,” notes Andrés Fontao, co-founder of Finnovista, a Mexican venture capital firm focused on fintechs. “A significant portion of the population, both consumers and small to medium-sized enterprises, still lack full access to traditional financial services, creating a substantial opportunity for fintechs offering innovative and accessible solutions.”

Distrito charted 1,658 rounds of financing in the decade through first-half 2024, including 1,034 in Brazil. But this year alone, through June 30, has seen 83 deals worth $800 million, equal to 80% of all investments in fintechs in 2023. The two largest rounds this year were from QI Tech and Celcoin, for $250 million and $150 million, respectively. The QI Tech offering turned it into a unicorn, with an estimated value of over $1 billion.

Explaining the success of the company he co-founded six years ago, QI Tech CFO Marcelo Bentivoglio notes, “We have been growing more than 100% per year and held 300 clients, the biggest of each sector. I think we filled a gap in the financial market, as the company is focused on technological infrastructure for credit, banking, payments, collections, onboarding, anti-fraud, and all the necessary tools to boost financial services.”

Regulation and innovation have been key factors, he says.

QI Tech helps companies from different segments set up digital banks and provide financial products to their customers. If a company in retail, for example, wants to open a finance company offering payment options, billing, and credit issues, it can do so using QI Tech’s infrastructure. That, in a nutshell, is banking as a service (BaaS), which enables non-financial institutions to partner with QI Tech—or one of its rivals—to offer financial services to end users. BaaS started with tech companies that license their software for a monthly payment (SaaS) rather than selling a full operational software package for a one-time payment.

Last December, QI Tech purchased brokerage firm Singulare, which has $120 billion Brazilian reais ($24 billion) in custody. That acquisition came on the heels of an announced investment of R$1 billion ($200 million) in QI Tech in a Series B round led by General Atlantic with the participation of an existing shareholder, Across Capital, which is doubling its initial investment in the company.

Latin America counts 2,712 active fintechs, the majority in Brazil (58.7%), followed by Mexico (20.7%), according to Distrito. What gives Brazil such a strong lead? First, it’s region’s most populus country, and second, the Central Bank of Brazil contributes a lot to regulating fintechs, a process started more than 20 years ago. Without regulation, fintech services would not be allowed.

“As five banks concentrated 80% of the financial services, the competition was really low,” says Diego Perez, president of the Brazilian Association of Fintechs (ABFintechs). “In 2013, there were only two means of payment, and today we have more than 200 agents offering this service. As a result, there is more competition, and it’s positive for customers.”

Not everyone succeeds. Statistics from ABFintechs reveal that for every 10 new fintech companies, two will be successful in five years. This is similar to the public market equivalent for Brazil as a whole: 80% will fail and 20% will survive. In contrast to a decade ago, big banks are now joining successful fintechs for acquisitions or even collaboration.

“We are still in the beginning,” says Perez.

While the majority of Brazilian fintechs are focused on means of payment, in Colombia entrepreneurs are exploiting mainstream banks’ reluctance to provide credit for the bulk of the population. They are busily filling a niche between the banks and the coterie of illegal lenders known as “drop-to-drop,” which typically lend money at abusive rates of interest to needy people. 

“Those moneylenders applied up to 280% of the original value of money credited in 24 hours, which is extortion,” says Eduardo Montañes Silva, CEO of Bogotá-based consultant LiSim International. “In the legal system, it’s around 2.5% monthly. So fintechs became a suitable option for millions of people.”

While a traditional bank can take five days to approve a loan, fintech startups have found a practical way to lend money in two hours.

The Colombia Association of Fintechs has around 200 members, but estimates the country has 300 fintechs in all. Many are small operations with little investment, making growth difficult in the short- to medium-term. In this scenario, Montañes foresees, it will take a wave of mergers and acquisitions to develop the business.

“If two small companies join, they together can have more clients and attract more investments,” he says. “Colombia is an opportunities country and foreign investments are very welcome.”

Argentina poses greater difficulties, due to high inflation and a lack of circulating money. Fintechs there are focused on means of payment and investing in services that help customers protect their money, such as Mercado Pago, a digital wallet and payments platform, and Ualá, a mobile app used for managing Mastercard prepaid debit cards.

Regulations focus on the means of payment, banking transfer, and new technologies for mobile banking. “Both banks and fintechs are unable to offer credit, so they have to think about other services,” says Fausto Spotorno, director of consultant OJF & Asociados and director of UADE Business School.

Regulation makes a significant difference in Latin America, notes Finnovista’s Fontao, and countries are at different stages of development in this respect.

Mexico is a standout with its 2018 Fintech Law, the first in the region to lay out a clear legal framework, facilitating innovation and the entry of new players into the market.

“This law focuses on the widespread adoption of open banking and creates a safer environment for consumers and businesses,” Fontao says. “Countries like Chile and Peru are taking a more gradual and consultative approach, with recent efforts to strengthen fintech regulation and improve competitiveness in the sector.”

The pros of investing in fintechs in Latin America, he adds, are a strong talent pool, increasing access to technology, a young and adaptive population, and continued interest from investors themselves. “However, there are still some challenges to face in the region, such as the underfunding of the ecosystem compared to, for instance, the US; economic uncertainty; lack of access to funding in some regional markets; and political volatility.”

That said, Latin America’s fintechs are robust and growing, despite economic, political, and regulatory barriers. With appropriate investment, technological innovation, and a proper regulatory environment, the sector expects to continue positioning itself as an important agent in the region’s economy.

Leonardo Resende, superintendent of corporate relations at Brasil, Bolsa, Balcão (B3), Brazil’s stock exchange, notes there are strong listing candidates that will go public in a few months from the health-care, infrastructure, real estate and technology sectors.

Heads of listing at various investment banks say that companies like Pacaembu, the Tegra Group, Diagonal and Kallas in the real estate sector; Rio Energy, CTG and 2W Energy in the energy sector; and Cimed and Eurofarma in the health-care sector may go public in 2024.

Resende adds that more than half of the investments negotiated at B3 come from foreign investors, investors looking to reap good earnings and other benefits by investing in emerging countries’ enterprises. The new investment in these companies brings economic benefits beyond corporate expansion. With more jobs, more money circulates in the economy and increases consumption overall. “Brazil and B3 have been evaluated regarding regulation, infrastructure, processes and confidentiality. It is a great place to invest,” he says.

José Leoni, managing director of corporate consultancy Moneyminds Partners, says that foreign investors face a dilemma: In the US, the risk is lower but earnings are smaller, around 4% annually. The risk is higher in emerging markets, but profitability is also higher due to currency differences. So, for investors eager to earn more despite higher risks, Latin America is very attractive.

He is also confident about IPOs in the region. “This is the right moment, as companies had enough time to organize themselves internally before going public,” says Leoni. “The scenario couldn’t be more appropriate, with lower interest rates, companies prepared, and investors ready to invest their money.”

This is welcome news for investment banks, whose earnings fell 27% year-on-year (YoY) in 2023, the second consecutive year without an IPO on B3, after a 42% YoY revenue decline in 2022, according to data from consultancy Dealogic.

However, Latin American startups raised $2.5 billion in funding during the third quarter of 2023, according to a report published by financial data provider Sling Hub and Itaú BBA, with $1.5 billion coming from equity. An essential indicator to watch is total financing, which fell 26% YoY, including debt.

The dearth of Latin American IPOs started after Brazil’s Nubank fintech listed jointly on B3 and the New York Stock Exchange in December 2021. Before that, renewable-energy firm Raizen and oncology service provider Oncoclinicas had gone public the preceding August.

Meanwhile, Mexico had only one IPO in 2021, Chile’s largest IPO since 2019, and only the third on the nation’s new startup-focused ScaleX Santiago Venture Exchange.

In the 2021 Latin American IPO market, Brazil completed 53 listings, while Mexico had seen two other deals in 2020. Also in 2021, the Brazilian market raised the lion’s share of capital; $16.6 billion of the $18.7 billion regional total.

The stagnation began with the rise in the interest rate, which in Brazil, for example, went from 2% to 9.25% from the end of 2020 to the end of 2021. A similar scenario can be seen regionally. Mexico’s interest rate went from 5.5% to 10.5% between 2021 and 2022, while Chile’s rate rose from 4% to 11.25% during the same period. The average policy rate in Latin America stood at 18.9% at the end of 2022 but has since been falling.

Central banks generally use the policy interest rate to perform contractive or expansive monetary policy. The rise in interest rates is commonly used to curb inflation, currency depreciation, excessive credit growth, or capital outflows. On the other hand, by cutting interest rates, a central bank might seek to boost economic activity by fostering credit expansion or currency depreciation to gain competitiveness.

According to B3’s Resende, as fixed income became more attractive, the window of opportunity for IPOs closed. Yet interest rates stepped back in 2023, and companies took advantage of them to prepare for their IPOs. “Approximately 100 companies are waiting for the right moment to go public at the stock exchange, and we expect the majority of them in the second half of this year,” he adds.

On the other hand, the wars in Ukraine and the Middle East have brought uncertainty to the stock market and global economy. As a result, investors are more cautious; but the scenario is still optimistic due to the low influence of the conflicts on Latin American business.

In a January blog post, S&P Global Market Intelligence observes that “Latin America is attracting significant and diverse foreign investment, particularly in the critical minerals, renewables and manufacturing sectors.” S&P adds that “a key indicator of investment dynamics will be the launch of bidding rounds in the Chilean lithium sector, and likely further lithium investment opportunities in Argentina.”

S&P expects “headline and core inflation to continue falling in 2024, although more slowly than in 2023. Further declines in inflation will support a less restrictive monetary stance in 2024, particularly in Brazil, Chile and Peru.”

“Most Latin American governments will maintain fiscal sustainability in 2024,” adds the post’s authors. “Indicators suggest low political appetite to return to prior policies of maintaining strongly expansionary fiscal policy combined with debt accumulation and, in some cases, excessive recourse to the central bank ‘money printing.’ Chile, Trinidad and Tobago, and the Dominican Republic will be among the strongest performers in terms of improving fiscal metrics.”

“The largest expenditure cuts across the region will take place in Argentina, where President Javier Milei has promised a reduction in government spending of at least 5% of GDP,” says S&P. “A slight fiscal deterioration is likely in Mexico, with the government likely to increase spending to complete flagship projects before the June presidential election.”

“At the regional extremes,” the S&P bloggers predict, “Argentina will remain in recession, while Guyana is set to grow rapidly in 2024.” Few IPOs are expected in Argentina this year as gross domestic fixed investment will likely fall by 1.7%.

This is a year for exports, especially given 2023’s poor performance, says Orlando Ferreres, former vice minister of the economy for Argentina and president of macroeconomic advisory Orlando J. Ferreres & Asociados.

Chile, Colombia, Argentina and Mexico are very small compared to Brazil—their aggregated stock markets are approximately the size of Brazil’s stock market, according to Moneyminds’ Leoni, who doesn’t expect IPOs in these smaller markets.

Alberto Ajzental, an economics professor at Fundação Getúlio Vargas, says that Brazil is not in its best shape but is on the right track. For him, the most important question for investors is: Who is going public? Overall, companies go public to expand and grow their businesses, which is favorable for investors, companies and the economy. However, some companies go public to pay debts, which in that case is not a good deal.

“It’s better to consider investments in sectors such as real estate, energy and sanitation for this year,” says Ajzental. “In Brazil, for example, retail is quite critical at the moment.” He highlights the latest IPOs, which had much lower values one year after listing. In this situation, follow-on was more attractive, as some were 70% lower than their initial offering, as happened to Nubank in 2021.

 Latin America’s economy shows signs of improvement on the back of a prolonged commodities supercycle in the first half of the year and declining interest rates in the third quarter. This comes as the region’s central banks claim victory over inflation after the aggressive monetary tightening that swept the region starting in 2021 succeeded in pushing headline inflation downward.

Aggregated data estimates reveal a substantial pass-through from the monetary policy rate to the average rates on banks’ interest-earning assets and liabilities in Latin American countries over the past two decades. Against this backdrop, Latin American private banks this year have posted solid growth rates in both assets under management (AUM) and new-customer acquisition.

After two years of above-average growth, BTG Pactual’s private bank has maintained its upward trajectory in 2023 by focusing on the ultrahigh net worth (UHNW) customer segment. That has helped push the bank’s AUM to $112 billion as of March, marking a 16% year-on-year increase and 99% growth since March 2021. The influx of new UHNW clients drove net new money to $23.8 billion over the year, and revenue surged by 51% to reach $516.5 million.

BTG Pactual credits its decision to hire and develop top professionals for the UHNW and HNW segments with a 58% growth in Wealth Management Latin America’s client-facing staff since 2020.

Sustainability has become a fundamental pillar of Bradesco Global Private Bank’s culture and vision. The bank is now included in leading sustainability indexes and environmental, social, and governance (ESG) ratings globally, and it has implemented various measures to enhance its environmental commitment.

The bank reports that 99.8% of Bradesco Asset Management’s AUM meets ESG criteria. Bradesco is the top-ranked Brazilian private bank on the Dow Jones Sustainability World Index, with 100% of its operations powered by renewable energy and operational carbon emissions fully offset.

Santander’s digital private client count increased by 11% last year, bolstered by continuing enhancements to improve the client experience across Latin America.

In Chile, the Mis Objetivos platform transformed how clients approach their financial goals, enabling automatic monthly investments from their bank accounts along with personalized investment advice. In Brazil, Santander streamlined communications through media-rich push notifications, doubling digital clients and quintupling monthly visits. The bank also continued investing in Spirit, a multilingual tool that supplies bankers with client information and tailored investment proposals. Santander’s team in Argentina improved the tool with enhanced client-position information and segmentation.

Moreover, the bank introduced Brazil’s Home Bolsa, which the bank credits with a 42% increase in trades from clients, offering a user-friendly experience with real-time stock market monitoring, exclusive content, and personalized suggestions.

Virginia, Santander’s flagship e-banking solution, also saw improvements globally, including an added derivatives functionality in Mexico and Miami.

Tailoring offerings, services, and performance to cater to a diverse clientele ranging from those with established fortunes to emerging tech magnates and the next generation demands a blend of expertise and vision. It also requires an ability to see past headwinds and help clients plot a long-term course.

This year has been a singular year for private banking, as providers watched the almost simultaneous fall of one of the largest private wealth managers in history, Credit Suisse; and one of the most innovative, Silicon Valley Bank (SVB). Despite which, the industry has shown resilience as historical powerhouses such as J.P. Morgan, UBS, Deutsche Bank, Citi, and Bank of America stepped up to prevent a financial crisis in the wake of the collapse of SVB, Signature Bank, and First Republic Bank—later reaping the rewards, increasing their clientele, staffing, and structural capacities.

Moreover, J.P. Morgan Private Bank kept improving its offerings and global presence. This year, it opened a new US Family Office Practice and added to its teams in Asia and Latin America while making changes in upper management in both regions.          —TM

Westpac Private Bank acts on the belief that commitment to diversity begins at home. The Australian market leader has set specific targets for gender representation within its leadership ranks, with the aim of filling 50% of leadership positions and at least 40% of board seats with women.

In March, the bank introduced a set of initiatives to support female entrepreneurs as part of its 500 million Australian dollar (about $318 million) commitment to women in business. The initiatives include offering startup loans of up to AU$50,000 with a three-year tenor and providing scale-up loans of up to AU$1 million to assist existing businesses in their growth, also with a three-year tenor.

“Boosting women’s entrepreneurship in Australia is important to the economy,” said Chris de Bruin, who has since stepped down as group chief executive of consumer and business banking, in commenting on the initiatives. “The longstanding gender pay gap represents a missed opportunity for innovation, social and economic value creation, and job creation.”          —Jonathan Rogers

DBS initiated its digitalization journey in 2014, with the aim of developing artificial intelligence (AI) and machine learning models and utilizing cloud and open-source technologies to facilitate a transformation into a fully digital bank.

Since then, the Singapore-based bank has achieved several breakthroughs in the field, reducing costs by 30 million Singapore dollars (about $22 million) while increasing revenue by SG$180 million.

Among the most important developments are an internal self-service AI platform, an AI protocol, and a knowledge repository, enabling rapid AI deployment at scale. DBS’ integration of its relationship management systems with AI, referred to as the “phygital” (hybrid physical and digital) dynamic, has also played an important role in delivering optimal client service to its private banking clients.    —JR

Having been the top-rated bank on the Dow Jones Sustainability Europe Index three years in a row, BBVA is an undisputed global leader in the field. The Spanish giant’s success rests on two pillars: alignment of all loans and investments with the Paris Agreement and a comprehensive range of sustainable products and services for the bank’s clients.

BBVA offers a family of sustainable mutual funds whose managers are committed to impact investing. It also constantly monitors the environmental, social, and governance (ESG) credentials of third-party funds through its proprietary Quality Funds platform. Sustainability-risk information goes digitally to private banking clients in compliance with the EU’s Sustainable Finance Disclosure Regulation. Finally, to ensure that its clients have confidence in its commitment, BBVA now requires all of its private bankers to hold an external sustainability certificate. —Jonathan Gregson

BTG has built an investment-solution ecosystem that aims to meet all of its wealth management clients’ medium- and long-term goals with an integrated, one-stop-shop approach. The platform leverages cutting-edge technology and up-to-date analytical information, enabling BTG’s team to upgrade clients’ financial experience into a user-friendly, easy-to-navigate environment.

One of the main features is constant dialogue with clients over their developing needs. For this, BTG focuses on three vital aspects: recruiting and nurturing top professionals for the front, back, and middle office and product areas; deepening its understanding of clients’ financial needs and objectives; and staying ahead by anticipating global and local market opportunities, especially during challenging periods.            —Estela Silva

Reliability, investment performance, and tailor-made solutions are requisites for high net worth (HNW) and ultrahigh net worth individuals (UHNWI) shopping for a private bank. Banque Richelieu Monaco, which takes home our award this year as Best Boutique Private Bank in the World, checks all of these boxes, along with above-average staffing and growth of assets under management (AUM).

With nearly 40% of its AUM base landing in the UHNWI category, Richelieu maintained its focus on offering rapid, tailor-made decision-making, enabling clients to navigate wealth management seamlessly. It was rewarded with stellar growth this year, as AUM grew 17% and net profits an impressive 47%.

Richelieu’s strategic focus encompasses markets including Monaco and other European countries, which account for 60% of AUM; while Africa, Asia, the Middle East, and the US account for the rest. Nonetheless, it has kept on building foreign partnerships, notably with Banque Richelieu GCC in Cyprus and Abu Dhabi. A recent collaboration with banking and wealth management software developer ERI has enabled the bank to improve efficiency and upgrade its technology offerings, improving client service.  —TM

Hana Private Bank has made a name for itself as an innovator by offering new digital assets, accessible and manageable on Hana’s 1Q Bank app, to its HNW clients. The new products include security token offerings and fractionalized stakes in blue-chip artworks by artists such as Picasso, Warhol, Kusama, and Basquiat using nonfungible tokenization backed by blockchain technology.

The South Korean bank established Hana Art Bank in July 2023 in alliance with an alternative investment platform company to appeal to “microcollectors” via fractional ownership.

Hana teamed with KPMG in February to launch two more new offerings: succession planning services, including valuation and M&A advisory; and a private community linking younger HNWIs with CEOs for networking and business-opportunity creation.          —JR

J. Safra Sarasin sees sustainability as the most critical aspect of its approach to socially responsible investment. The Swiss private bank has closely integrated two key sets of standards: the Paris Agreement on climate change and the UN’s Sustainable Development Goals. Both are embedded in Safra’s corporate strategy and core investment offering.

Safra has been ahead of the curve since it launched its first sustainable investment mandate in 1989, and it has consistently directed resources to companies that embrace energy efficiency and decarbonization. A founding signatory of the UN Principles for Responsible Investing in 2006, Safra launched its own proprietary Sustainability Matrix more than 20 years ago and today requires that all of its mandates be sustainable. —JG

As the private banking world buckles up to help manage one of the most significant generational wealth transfers in history over the next couple of decades, BTG Pactual Wealth Management is working to stay ahead of the pack. The bank’s Future Leaders program is dedicated to preparing heirs for roles in shaping future legacies through comprehensive education in legal, economic, and tax aspects of estate planning.

Recognizing the pivotal role women will play in guiding the next generation of wealth management, BTG also offers Financial Journey–Women Investors, a financial education and leadership initiative aimed at helping participants make informed financial decisions and explore diverse investment strategies.     —ES

Managing approximately $1.3 trillion across the globe, Scotiabank has evolved into a powerful worldwide force. Since 2018, the Canadian bank has grown and diversified on the back of a series of multibillion-dollar acquisitions in areas including asset management and foreign exchange hedging.

Intergenerational wealth transfer and transition services are central to Scotia Wealth Management’s Enriched Thinking offerings. Scotiabank backs these up with the stability of its Canadian operations and its expertise across the globe. This helps entrepreneurs facing uncertainty in their home country to invest in more-secure markets.

A tailored fee structure helps Scotiabank to create a more customized practice with each of its business clients, backed by a five-year program that identifies customer needs and delivers solutions in one plan. Thanks to this approach, Scotiabank’s commercial banking business has seen sixfold volume growth in referrals over the past six years, to $13 billion.       —Nic Wirtz

Combining a deep knowledge of local markets with best-in-class global capabilities, Fifth Third Private Bank won high marks this year for service to entrepreneurs amid a volatile global economy. Its team of senior strategists, CPAs, and attorneys combined to produce a financial advisory offering that earned Fifth Third outstanding numbers in its customer satisfaction survey.

The bank continued to improve its tailored offerings to business owners. Last year, it partnered with a group of universities across the US on an exclusive survey aimed at understanding the strategies that middle-market business owners use in planning and executing transitions. The research yielded insights into the hurdles facing wealth managers in this market segment, particularly in the post-pandemic landscape, prompting further improvements in Fifth Third’s offerings.          —TM

With dedicated teams spread across Western Europe, Switzerland and the US, Santander Private Bank has expanded its client base of family offices by 16% over the past year to 3,090 families globally.

Recognizing the unique needs of UHNW clients, the Spanish-based bank recently introduced a team focused on offering a comprehensive suite of strategic investment banking solutions for family offices. Santander’s flagship Private Real Estate Advisory (SPREA) program helps UHNW clients identify promising investment opportunities and efficiently execute transactions. SPREA has dedicated teams in key regions, including Spain, the US, Portugal, Mexico and Brazil.

This strategic positioning allows the bank to tap into cross-border investment flows between the continents on which it operates. In 2022 alone, SPREA enjoyed 20% YoY growth in net revenue while overseeing €321 million (about $343 million) in total transaction value, underscoring its success in serving UHNW clients’ real estate investment needs.  —ES

Emirates NBD is becoming more and more of a global bank. The Dubai-based bank has developed a strong network in emerging markets from Africa to Asia, with a presence in Egypt, Turkey, Bahrain, Russia, Singapore, Indonesia and China.

In 2022, the bank opened two additional branches in India to complement its Mumbai offices. It also expanded its network in Saudi Arabia, the Middle East’s biggest market, with a booking center and 13 branches.

In these countries, Emirates NBD offers first-class private banking services but is also leveraging its ability to act as a bridge institution facilitating wealth transfers and providing investment solutions to large expatriate communities from the Global South.

Adapting to youth and new technologies, Emirates NBD also operates Liv, a digital bank, and just launched ENBD X, a new mobile app with an embedded digital wealth platform that allows clients to access over 11,000 global and regional equities with just a click.     —Chloe Domat

The initial success of this strategy is reflected in the bank’s excellent financial performance, which underscored the resilience of its balance sheet. Notably, the Federal Reserve’s annual stress test reaffirmed PNC’s financial strength and stability across economic cycles even while other banks faced difficulties.

As its rivals stuck to the basics, PNC focused on environmental responsibility and economic empowerment through private bank inclusion, committing more than $1 billion to bolstering African American–owned businesses in underprivileged communities and comprehensive sustainable investment offerings.     —TM

The Netherlands’ leading bank, which has long provided bespoke private banking-style services to its wealthier clients, recently lowered its entry threshold to €500,000. Given that this is by far the fastest-growing segment of the private banking market, the move has yielded healthy growth in a challenging year.

ING’s new cutoff point is part of a broader strategy of guiding existing clients into more value-added services. The bank currently fields a team of 450 advisers and investment specialists furnishing a full range of discretionary, advisory, and execution-only services to the rapidly expanding clientele.

The bank differentiates between clients, says Katja Kok, head of Private Banking and Wealth Management, Netherlands. The advice on financial planning and asset management needed by an individual with €5 million in assets is “perhaps even more relevant for someone with an invested capital of €500,000,” she says.      —JG

Bradesco Global Private Bank is working to grow its HNW and UHNW client base by focusing on the midmarket. To appeal to prospective customers with a net worth ranging from $1 million to $24 million, the bank is increasing its international offering, promoting better services for multinational Latin American fortunes.

Since 2020, that strategy has including acquiring other providers, including the Brazilian private banking operations of JP Morgan and BNP Paribas, further cementing its position with the country’s inbound transnational wealth.

It is also pushing into US market, building on its 2020 acquisition of Coral Gables–based BAC Florida Bank. Bradesco aims to bridge the gap for US-based Latin American customers in search of a trusted brand to manage their transnational fortunes.   —ES

Catering to one in four of the world’s billionaires—nearly 15,000 HNW and UHNW clients in over 130 countries, and more than 1,700 family offices—Citi Private Bank’s strong position helped it weather the year’s challenging conditions, including higher interest rates and geopolitical tensions.

As a division of Citi Global Wealth, Citi Private Bank maintains clear strategic priorities, focusing on the high end of the UHNWI market and clients whose net worth exceeds $25 million. That concentration helped the bank to achieve robust client growth in 2023, adding over 900 new clients representing a 21% increase over the previous year, a new record for the bank. The average net worth of Citi newcomers rose as well, by 12% to $450 million. That growth spurt gives Citi Private Bank a total of $461 billion in client assets, an 11% increase from 2022. Despite the adverse market environment, total revenue remained steady.         —TM

The recent pandemic triggered a boom in the adoption of technology, including digital payments and e-commerce. According to a recent McKinsey survey, technology adoption has also been supported by the rise of new and innovative fintech firms with four-fifths of Latin America’s start-up “unicorns” now focusing on finance and e-commerce.

This rapid rise in technology adoption is striking, and it demonstrates again that less developed regions can sometimes scale up emerging technologies more rapidly than areas with more established value chains. Whether Latin America can establish itself as a leader in cutting-edge technologies is less clear, however.

Regional investment in research and development is 0.6% of GDP, less than one-quarter the average in the OECD and China. Moreover, the region accounts for less than 2% of the world’s patent applications, and of these, less than one-fifth are filed by Latin Americans.

AI poses challenges too. As it takes off globally, the region risks lagging behind again. AI’s impact on Latin America’s economy will be three to five times lower than its impact in North America and China, McKinsey suggests.

Fabro Steibel, Executive Director of the Institute of Technology and Society (ITS Rio), which studies the impact of technology upon Brazil and the world, finds reasons to be optimistic, however.

“Over half the population joined the PIX digital payment system in less than a year. There is no other country with a similar system,” says Steibel, referencing Brazil’s real-time electronic payment system, launched by its central bank in 2020. “Also, we are leaders in blockchain in the public sector,” he adds.

Barriers could still delay further technological development, including logistics, patent systems, and a shortage of manufacturing facilities. “There is very limited planning for it in Brazil or Latin America and in this way, we will never be an AI leader in top technologies, but with better government policies we can be leaders in AI implementations,” says Steibel.

One bright light in the region’s development has been its fintechs, like MercadoLibre, the largest online commerce ecosystem in Latin America based on unique visitors. With origins in Argentina, MercadoLibre today has a market capitalization of $62.3 billion and is sometimes called the “Amazon of Latin America.”  It processes digital orders processed in 18 countries. But here too there are limits.

“The company is succeeding in Argentina and Latin America, but the region is still behind the developed countries,” explains Fausto Spotorno, director of UADE Business School in Buenos Aires. Latin America still lacks the necessary infrastructure with respect to the internet, connectivity, and energy, among other areas.

Argentina cannot compete with the world, continues Spotorno, but it can still develop technologies for domestic consumption in services, agribusiness, and smart cities. “The stimulation of technology studies should help both the country and the region, as only 15% of undergraduates are interested in science and technology”

The region clearly needs to invest more in education and skills to prepare its workforce for emerging technologies like artificial intelligence, data science, and advanced manufacturing, he adds.

How can this be achieved? Sílvio Meira, founder, and chief scientist at TDS Company, a strategic digital consulting firm, thinks back to the 1980s when Brazil invested in AI, including programs in higher education.

But the government’s support was never really consistent. “Our financing programs in technology were firefly funding, so our talents were retained abroad, and those who returned were not aligned with Brazilian business,” he explains.

The same situation pertains in Latin America today. The region needs to think big, working to solve important global challenges, Meira says. Chile and Argentina are closer to his ideal, producing “unicorn” startups like MercadoLibre and Globant, an IT and software development company with headquarters in Argentina. Education in these countries is more effective, taking a more global view, he adds.

Governments in the region can play a vital role in fostering technology adoption by implementing policies that encourage innovation, protect intellectual property, and provide incentives for R&D investment. Clear regulatory frameworks and supportive policies can attract both domestic and foreign investors.

As for AI technologies specifically, Meira thinks Brazil and Latin America are late to the game. What’s needed regionally is a technology policy more like Finland’s in the 1980s as that country started to move towards information technology. That government established the Science and Technology Policy Council of Finland and the National Technology Agent, Tekes, to coordinate the planning of policy on innovation and expertise and provide funding.

Ximena Aleman, co-CEO and co-founder of Prometeo, a Uruguayan-based open banking platform, highlights the importance of local regulators. “Regulation is key for innovation to happen—as long it is an enabler and not the other way around. We can build more lanes so that more vehicles can efficiently and swiftly navigate payment interoperability.”

Collaboration among universities, research institutions, and private sector companies can accelerate technological progress too. Cross-border partnerships can facilitate knowledge exchange and access to resources that can help the region catch up with global technology trends. “We have been improving, but still 30% of the population is not [Internet] connected and 40% is poor,” says Sebastián Rovira, Economic Affairs Officer at the United Nations Economic Commission for Latin America and the Caribbean.

Digital transformation can be accelerated through regional alliances, such as Mercosul (aka Southern Common Market) and the Pacific Alliance, a regional initiative created by Chile, Colombia, Mexico and Peru. The 33 countries working together are likely to be more effective than countries working alone. “We can go beyond only e-commerce and look at our complementary vocations to develop technologies,” says Rovira. “For example, Chile is focused on mining and services, Brazil and Mexico are strong in manufacturing,” and so on.

Itzel Alejandra Zarate Solis, program director in Business Intelligence at Tecnológico de Monterrey (ITESM) in Mexico, supports regional integration but says it may be difficult to achieve due to different policies, economics, and social issues among the countries. She believes education has a fundamental role in accelerating technological competitiveness.

The university has implemented a business intelligence and innovation program that provides regular interactions between students and companies. These are designed to surface real business problems in search of solutions. Oxxo, 7-Eleven and Mars, among others, have participated. Of the 12,000 students that graduated from ITESM last July, 70% participated in this program in some form. “The results are amazing,” reports Solis. “They [i.e., the students] are more resilient, analytical, creative—and also comfortable working in groups.”

In conclusion, while Latin America has historically lagged in R&D investment and technology adoption, recent developments suggest that the region may soon close the gap. By investing in education and R&D, fostering innovation, and creating an enabling environment for entrepreneurship, Latin America can position itself as a significant player in the global technology landscape.

After a bidding war with Mastercard, its main rival, digital payments giant Visa acquired Brazil-based fintech company Pismo for $1 billion in cash.

Founded in 2016 by Ricardo Josua, Daniela Binatti, Juliana Binatti and Marcelo Parise, Pismo developed cloud-based platform-as-a-service solutions that include core banking, payments, digital wallets, marketplace and financial asset management functionalities.

For Visa, the world’s largest payment processor, joining forces with Pismo marks its first major consolidation since 2021, when the company bought two companies: Tink, the European open banking platform, for $2.2 billion, and British cross-border payments provider Currencycloud.

With Pismo, Visa is positioned to enable both banks and fintechs to quickly create digital wallets or cards and use transaction data to improve its services to customers.

Pismo’s platform will also help Visa provide support and connectivity for emerging payment gateways, such as Pix in Brazil, for financial institution customers. Pix is a bank-transfer payment method, built and owned by Brazil’s Central Bank and linked to over 700 Brazilian financial institutions.

The deal is a win-win relationship, according to Alberto Ajzental, an economy professor at Fundação Getúlio Vargas.

“Both are winners, as Visa demands Pismo to support services around the world, such as credit and debit cards, means of payment, and technology. For Pismo, the Visa brand provides an international reputation and opens a set of opportunities worldwide,” says Ajzental.

From a technological point of view, the deal is only the beginning. “We can foresee Visa updating its operations with Pismo’s platform and being able to accept and expand Pix, the most popular means of payment in Brazil, and growing,” Ajzental observes. “At the end of the day, Visa can create a bank.”

According to a report by the Central Bank of Brazil issued in June, Pix payments accounted for almost 30% of transactions last year. That’s higher than 20% for credit cards and 19% for debit cards.

The deal, which is subject to regulatory approvals and the other usual conditions, is scheduled to close by the end of the year.

Even though most markets in the region regained some of the output lost to the pandemic, 2021 recoveries were generally mild due to prolonged pandemic restrictions, limited tourism rebound and operational challenges to commodity production. Against this background, several markets posted a strengthening recovery in the first quarter of 2022, largely bolstered by an upsurge in tourist arrivals.

The Caribbean and Central America have been at the forward edge of cryptocurrency testing as well, with the Bahamian “sand dollar” and El Salvador’s experiment testing these waters. The region, long a finance hub, should be able to find a strong footing in the world of digital finance and serve the most forward-thinking of wealthy investors. 

RBC Caribbean’s team conducts extensive research and offers insights to identify opportunities to build clients’ wealth, provide tax efficiencies or generate additional income, making it our top choice again this year. The bank also offers guidance on use of proceeds from a life event—such as inheritance or sale of a business—to help accelerate wealth for business owners or corporate executives who may have professional responsibilities to a business or firm in addition to their personal financial interests. Both are subject to regulatory complexities that may be challenging to fulfill. In April 2021, the company closed on a deal selling off its Eastern Caribbean operations to a consortium of local banks. In 2021, clients and employees settled into the new normal as the demand for digital banking offerings continued to grow. Employees proved their resilience even in a hybrid work-from-home-and/or-at-the-office environment.

CIBC FirstCaribbean International Bank is a relationship bank offering a range of market-leading financial services through its corporate investment banking and wealth management divisions. CIBC FirstCaribbean operates within a well-regulated environment, under the supervision of 10 banking regulators across 16 markets.

The bank has built a strong reputation, over more than a decade, as the region’s go-to lender for electric utility providers and independent power producers seeking to bring the benefits of sustainable, renewable energy to the Caribbean, which makes it a natural home for wealthy investors seeking the same. Many Caribbean governments have announced commitments to grow renewable energy use and decrease dependence of their economies on fossil fuels.

Citi Private Bank’s flagship global wealth management portal for clients and bankers provides highly sophisticated institutional-level tools along with traditional private banking functions. In 2021, the bank generated $3 billion in revenues while onboarding 456 new private bank clients, who brought average net worth up by 12%, to $450 million, for the bank’s private client base. With key Caribbean outposts in The Bahamas, Dominican Republic, Trinidad & Tobago, Jamaica and Puerto Rico. The bank created an Office of Innovation, headed by Philip Watson, chief innovation officer and head of the global Investment Lab. The OI guides private banking clients through the newest technologies and keeps them up to date with trends. In 2021, the bank hosted several client calls demonstrating its digital capabilities to ensure that clients will remain engaged and fully supported remotely. Additionally, the CitiDirect Digital Onboarding platform was enhanced to make Citi Private Banking more accessible, with a more intuitive navigational display, increased transactional capabilities, integration with other banks, comprehensive performance reporting and more. 

The rise of the middle class investor has pushed down private banking’s total share of assets under management (AUM) in Latin America; but despite this and the effects of the pandemic, wealth has continued to grow. Market gains sent family wealth soaring, and growth in family offices across the region has also been robust.

Brazil and Mexico have the greatest number of high net worth individuals (HNWIs) in the region, followed by Chile, Colombia, Peru and Argentina, according to a report by consultants Mordor Intelligence. Alternative investments are booming, and private equity is popular among wealthy investors. “Many people are seeking diversification by investing in foreign markets, particularly in the US,” according to Mordor. The region’s tech strength is minting new millionaires and new investment options. Venture capital is playing a strong role in Brazil, and Mexican family offices are investing 4.4% of their AUM in venture capital, Mordor reports.

Based in Brazil, the largest economy in Latin America—with 216 million people, GDP of $1.9 trillion and GDP per capita of $8,860—BTG Pactual recorded impressive growth across its wealth management desks in 2021. AUM grew 36.1% to $48.4 billion; while net new money (NNM) reached $12.3 billion, increasing 138%. In Brazil alone, BTG’s AUM grew 47.5% over 2020, NNM figures shot up 158% over the prior year. Total revenues hit $150.8 million, representing 25.1% growth over 2020, in part due to innovative investment offerings for wealthy clients, including local real estate funds and new alternative-investment options, supported by a comprehensive digital platform.

These accomplishments were possible due to BTG Pactual’s deep understanding of client needs, its strength in capital markets and M&A, and continuous investment in hiring the best professionals for both ultrahigh net worth and HNW segments—client-facing staff having grown 30.4% since 2020. BTG Campus, an internal training platform launched in 2021, provides a range of education services, including onboarding programs for wealth management teams.

Santander Private Banking (SPB) serves more than 48,000 clients in Latin America through local banks as well as international platforms in Miami, the Bahamas and elsewhere. In March 2021, the private banking unit in Miami acquired a $4.3 billion portfolio from Indosuez Wealth Management.

SPB’s goal is to embed sustainability in growth strategy and decision making. Santander provides clients with tailor-made portfolio reviews with qualitative and quantitative indicators showing impact; alignment with the UN’s Sustainable Development Goals; and performance according to the bank’s own environmental, social and governance (ESG) methodology. Since 2020, bankers and advisers have received internal training from ESG teams and now have the opportunity to obtain a corporate certificate from the International Association for Sustainable Economy.

Bradesco Private Bank has seen 104% growth in AUM over the past five years, in part through the strength of its digital initiatives. Today’s partnership with Brazilian startup Smartbrain began when Bradesco gave two employees—one from the private bank and one from its innovation department, Inovabra—four months to brainstorm new benchmarks and product opportunities. The Smartbrain platform that emerged aggregates a client’s liquid and illiquid assets so the bank can act holistically when advising wealthy individuals and families.

Bradesco Private Bank is educating young wealth through a strategic front aimed at serving the Y, Z and Alpha generations. Bradesco Private also engages focus groups for innovative finance ideas as they arise, such as cryptocurrencies, central bank digital currencies and the metaverse, to keep clients up to date on fresh innovations.

Financial markets are evolving rapidly thanks to new technology, data collection and processing, and digital-product creation. In Latin America, however, the so-called open banking or open finance movement is advancing at different speeds throughout the region, with some countries developing faster than others.

Open banking is a result of European Parliament resolutions created to bring competition and efficiency, as well as more choice and higher security, to consumers and online-payment providers around the world. Countries such as Singapore, India, the UK, Hong Kong, Japan and Canada have already adopted open banking. In theory, Latin America should be on the way to open finance as well, creating a possible bridge for financial inclusion.

“The system was created to reduce the big banks’ concentration and centralize data in one platform,” says Álvaro Bandeira, independent financial consultant.

So far, this effort has met mixed success in Brazil—the regional leader. A system of central bank supervision, regulation and authorization of participating institutions is in place. The technology is working well, and large and medium-sized Brazilian banks are required to join the open finance initiative. However, one key component is missing: the customer.

“The adoption of open finance is minimal,” says Bandeira. “There are 130 million people with bank accounts, and fewer than 4 million people have shared information to open finance.” The problem, he explains, is that consumers have been burned by newfangled finance systems in the past. “Users are not so confident with this technology, due to security problems we have faced in other technologies.”

He cites Pix, an instant, free electronic payment method offered by the Central Bank of Brazil, beginning in late 2020, to individuals and legal entities. Pix works 24 hours, seven days a week. According to cybersecurity firm PSafe, fraud attempts involving Pix have increased 1,191% in the first half of this year compared to the same period in 2021. Those alarming figures provoke trust problems in the banking system not only in Brazil but also in many countries across the region.

“Latin America’s financial history is not very favorable to banking,” says Jaime Valdívia, chief economist at Galapagos Capital, a global investment company. He recalls some unpopular government initiatives in the 1980s to suppress money withdrawals by users in Argentina, Mexico and Brazil. As a result, the generation now in their 40s is wary of banking innovations.

An additional barrier: mobile theft has increased in the majority of the region’s countries. In Mexico, for example, in 2020-2021 it rose 106% over the previous two years, according to the National Telecommunications Association, Anatel. Mobile financial apps are easy to use for making transfers, so it is much easier to assault people than to rob a bank.

Both Valdívia and Bandeira acknowledge the security problems inherent in open finance, but they believe it needs a better communication campaign to show users its advantages. “It would be important to show how beneficial it will be for the client, as through a single platform it is possible to have full visibility of all banking accounts and choose the best product offers,” says Bandeira.

Regional fintech companies are striving to make the benefits of open finance more tangible. Among them is Uruguay’s Prometeo, working with 10 countries across the region to build application programming interfaces with various business partners. With more than 50 active clients, it does not deny the security problems that banks have to improve in order to win costumer confidence. Still, the company is very busy, according to Prometeo co-CEO and co-founder Ximena Aleman.

“We have been growing faster in the last 18 months, and our revenues increased 10 times in this period,” Aleman says, citing plans to increase revenue three times in the next 12 months. Prometeo also plans to hire 20% to 30% more people. Although the company is growing, and business is better than expected, there are some barriers to implementing open finance technology on the continent, Aleman explains: “Countries are still looking for their standards.” Peru, Mexico, Colombia and Uruguay are best equipped to adopt the technology, he adds, and as a result, “banks from those countries have the most advanced negotiations with [Prometeo].”

For the players involved, it is clear how beneficial it is for customers to find the best financial offers using a single platform—and also for fintechs, as they will access to users’ information and increase their potential client base. However, as many countries are still evaluating how to adopt it, it remains to be seen whether implementation will be mandatory.

Giorgio Trettenero Castro, secretary general of the Latin American Federation of Banks (Felaban), says open finance is a natural path for the financial system to follow.

“We would say that it is a global trend imposed by technology,” he says. “Data management and its collection under suitable rules and technologies are among the sources of modern financial development.”

For Trettenero, the heterogeneity of open finance is normal, given that in Latin America there are different degrees of economic development. The countries each have differences in the level of income per capita, size of the economy, public finances and relationship with foreign trade. Similarly, countries exhibit differences between the degree of financial development, depth of financial systems and the evolution of domestic capital markets.

“It must be said that the differentiation between services and between entities is important, because the entities do not seek to resemble each other,” Trettenero adds. “On the contrary, everyone wishes to be different from their competitor, to present their best arguments, to be of service and to win the market.”

As open finance adoption remains free in each country, Banco Cuscatlan of El Salvador finds its way with it. As the technology still has no regulation in the country, agreements are made to benefit all the parties involved, although the open finance principle does not foresee any mutual agreement.

Although Cuscatlan plays a big role in El Salvador, and the bank purchased Scotiabank’s operations in the country at the beginning of 2020, the bank does not offer all services required by its clients. It might not be difficult to create these services; but instead, the bank chooses to find partners with suitable financial solutions and to continually search for business partners to further match its clients’ needs.

“We have found very good partners to increase our services; and at the same time, we have provided our partners with new clients,” explains José Eduardo Luna Roshardt, executive general director of Banco Cuscatlan.

Luna views the initiative optimistically, as preparation for the future. Once open finance is established, the bank will be ready to open its platform with the right partners to benefit customers, fintechs and banks.

“I believe open finance will be helpful to promote growth strategies—and, as a result, increase the number of accounts in the country,” says Luna. “There is a way to include people in the financial system, and the future is digital.”

The Latin America and Caribbean region will see growth decelerate in 2022 to 2.1% after hitting an average of 6.2% last year, according to projections released in January by the Economic Commission for Latin America and the Caribbean (ECLAC).

One source of buoyancy for the region’s economies is the oil and gas sector. Oil prices in early 2022 soared above the prior year, with Brent crude topping $100 per barrel in late February as the Russo-Ukrainian conflict exploded—more than 150% above the 2020 average of $42. Fitch Ratings predicts conditions for Latin America’s oil and gas companies will stabilize in 2022, after last year’s substantial improvement, and help keep regional economies afloat.

Yet, rising energy prices create a complex situation in many Latin American countries. Increasing production will help Latin America’s energy companies—and their owners, public or private—to benefit from higher prices for exports. Higher prices mean more royalties and revenue. But when it comes to domestic supply, higher prices can also spark inflation, restrain production in other sectors and render the citizens unhappy, giving government owners incentive to sacrifice some profit for domestic peace.

“Inflation is going to have a big impact,” says John Padilla, managing director and partner at energy consultancy IPD Latin America, pointing to Mexico and Colombia as particularly vulnerable. “They are not prepared to handle it.”

Furthermore, some of the region’s biggest power-sector entities are deeply indebted and/or in need of significant capital investment before they will be able to ramp up production to take advantage of rising prices. Petrobras is engaged in a long-term semi-privatization; while Mexico addresses the Pemex debt with a range of smaller measures, including a reduced tax burden.

Pemex, like many power producers in this region, has government owners; so domestic conditions, and politics too, impact how debt is repaid and prices set. “Latin American countries are struggling with their economies,” comments Rodrigo Nishida, an economist at São Paulo–based consulting firm LCA. The Brazilian government, through Petrobras, “will probably moderate prices to keep consumption on balance,” he adds.

Yet Nishida believes that long-term underinvestment in exploration and extraction is a bigger problem than politics—one that will require significant capital expenditure (capex) to address. At the same time, many of these companies are seeking to diversify into new business lines and new geographies in order to bolster the long-term sustainability of their businesses; and those expansions, too, require capex.

Ecopetrol Expands and Upgrades

This year, Colombia’s state-owned Ecopetrol, to take one example, has allocated close to $30 million for fuel-improvement projects and $6 million for development and pilot projects in green and blue hydrogen and other technologies for application in refineries. Such improvements will help Ecopetrol reach growth close to 5% in oil and gas production this year, the company says, and allow it to maintain exports while focusing on higher-value markets to take maximum advantage of high crude prices.

At the same time, Ecopetrol will put more than $200 million into water management projects and more than $50 million into decarbonization projects, along with further investments of about $1.1 billion in energy transmission, telecommunications and road transit in Brazil, Peru and Chile.

In all, the Ecopetrol Group plans to invest $4.8 billion to $5.8 billion in 2022, with 30% spent outside Colombia—in the US as well as closer to home. The Caribbean region will be the main recipient of exploration investment—78% of Ecopetrol’s investment focused on the search for natural gas will be executed in the Caribbean.

Petrobras, Pemex and others have their own plans for investment, expansion and diversification. But will it be fast enough? The energy sector typically requires long-term investments, with payoff in four to five years. Still, the world’s energy problems are not going away.

Mastering Debt

The massive debt of Latin America’s energy producers is another impediment to their fiscal health. Some of the main oil and gas companies from the region—Ecopetrol, Petroperu, Pemex and Petrobras—need to restore their balance sheets.

Mexico’s Pemex, in particular, holds the honor of world’s most indebted oil company. Production last year ticked up just 3%, which fell short of government projections and followed many years of decline—largely due to fields aging out and a lack of exploration and development in new sources. The government under President Andres Manuel Lopez Obrador has been generous with support in a tripartite plan to reduce the company’s tax, debt and risk burdens.

In September, the government lowered the “shared utility right” tax Pemex pays from 52% to 40%. In December, it was announced that it would give the company $3.5 billion in cash to pay down debt. At the same time, the company will swap out some debt, offering bondholders the chance to trade bonds maturing in the near term (2024-2030) for new 10-year bonds plus some cash, and, separately, buying back bonds with longer-range maturities (2044-2060).  The government even seeks to change the corporate structure and company management, in order to strengthen consensus around the objectives, according to Secretary of the Treasury Rogelio Ramírez de la O.

Petroperu gets similar backing, and owes its BBB+ rating from Fitch in part to the Peruvian government’s “strong incentives to support the company, as it is one of Peru’s largest liquid fuels suppliers.” Fitch also estimates that “Petroperu will maintain a structural debt above $5 billion over the rating horizon, with average leverage metrics in the range of 15x during 2021-2023, still high for the rating category.”

Petrobras, however, rather than attempting to milk the current situation to pay down debt, is engaged in a long-term piecemeal privatization, hoping to raise between $15 billion and $25 billion by selling some assets, and will overall invest $68 billion in higher-returning assets by 2026.

“There is quite aggressive divestment,” says Marcelo Assis, head of Latin America Upstream Research at energy consultancy Wood Mackenzie. “There is not full privatization, but it is a consistent strategy that will increase profitability.”

The company remains focused on rich reserves of “pre-salt” oil (buried deep under layers of rock, sand and salt below the ocean floor) that the company first explored in 2006. The Oil & Gas Journal estimates that as of January 2021, Brazil had 12.7 billion barrels of proven oil reserves, second in South America only to Venezuela.

The sale is expected to continue throughout the year. The October 2022 elections might have some impact, depending on circumstances; but the plan has lasted through contrasting administrations. “It started with President Dilma Rousseff but gained strength with Michel Temer and now Jair Bolsonaro,” Assis notes.

Rodolfo Saboia, director general of Brazil’s ANP (National Agency of Petroleum, Natural Gas and Biofuels), also states that the divestment program, by opening the local market to new players, will bring not only fresh capital, but also more competition.

“The Brazilian population is used to petroleum prices as a government decision, and it shouldn’t be like that,” says Saboia. “The more competitors we have, the better it will be for consumers.”