Multinational and behemoth private banks increasingly view Latin America as a cornerstone of their growth strategy.

Recently, global giants including Citi, UBS, BBVA, and Santander have revamped their teams and opened new divisions in the region, aiming to leverage their leading global offerings for a larger piece of the wealth pie. Meanwhile, local players such as BTG Pactual and Bradesco have been opening their wallets to increase the breadth of their services in asset classes and geographical reach.

The ultimate prize is an evolving market projected to reach $1.3 trillion in assets by 2029, according to a recent report by Research and Markets. “Banks need to grow, and there’s little room for that in markets such as China or Europe right now,” explains William Trout, director of Securities and Investments at Datos Insights.

Getting to the pot of gold at the end of this particular rainbow may prove challenging, however, as the investment preferences of Latin America’s superwealthy grow more sophisticated.

“As individuals become wealthier, their needs become ever more global,” says Alfonso Castillo, global head of Santander Private Banking. “They tend to increase investments in hard currencies while seeking a more sophisticated, comprehensive value proposition.”

These evolving demands do not replace but rather add to the “complexity of wealth in Latin America,” argues Trout. “The interconnections between businesses and families and the way the relationships are structured make the landscape particularly complex, and good planning an imperative.”

The region also faces structural changes in both demographics and wealth composition, says Antonio Gonzales, head of Latin America at Citi Private Bank. “Women already control more than half of the financial decisions in the business ecosystem in several countries, contributing to a more diverse and profound decision-making process when it comes to preparing the next generation of wealth owners.”

Furthermore, as customer needs grow more complex and global, traditional family offices are progressively looking to the big banks for support in meeting parts of their function.

“Although a family office has many advantages, it doesn’t always have the scale and resources of a private bank,” Santander’s Castillo notes. Last year, Citi Bank’s proprietary research found that just 30% of investments from family offices in Latin America were directed toward their own region, whereas 80% of investments from their counterparts in the US and 54% from Europe, the Middle East, and Asia remained within their respective geographic boundaries.

Yet, despite banks’ growing ability to provide more tailored services, there are no signs that the family office model is being abandoned. “I don’t see banks gobbling up family offices anytime soon,” says Datos Insights’ Trout. In fact, the number of single-family offices in Latin America serving one family exclusively, grew by an astonishing 200% over the past decade, according to recent research by Capgemini.

To meet the plethora of evolving needs, banks have been pouring massive investments into the region.

Under Gonzalez’s leadership, Citi Private Bank recently laid out an ambitious plan to double its LatAm presence.

“Considering the estimated projections of wealth generation in the region,” he says, “we believe it is possible to double our business in Latin America in the medium- to long-term, focusing on UHNW [ultra high net worth] individuals and families with at least $25 million.”

Boosted by its takeover of Credit Suisse early last year, Swiss powerhouse UBS recently made its LatAm division an independent unit, “recognizing its significantly increased size and potential,” the bank said in a memo.

Similarly, Santander has added 90 new private bankers to its Latin America-focused Miami office and in Mexico. The Spanish financial services giant expects to reach €500 billion ($556 billion) in assets under management (AUM) by 2025 and sees Latin America accounting for the bulk of that growth.

Aiming to boost clients’ already growing demand for global investment products, Brazilian behemoth BTG Pactual has gone on an acquisition spree. Recently, the bank took over New York-headquartered M.Y. Safra Bank and completed the acquisition of FIS Privatbank in Luxembourg. BTG has also opened offices in Miami, Portugal, and Spain.

The bank’s focus lies firmly on the offshore business, where it expects to reach $30 billion in AUM by next year, according to Rogerio Pessoa, head of wealth management.

Bradesco Private, another local giant, has followed a similar path. Focusing on improving its offshore offering, the Brazilian bank has ramped up investments in Luxemburg and acquired BAC Bank in Miami, Florida, now rebranded Bradesco Bank.

Also placing offshore at the center of its growth strategy, BBVA Private in March opened a new advisory office in Miami, fully focused on Latin America. The Spanish powerhouse also disclosed plans to expand its private banking teams in Brazil and Chile, two countries where it lags behind the competition.

“Due to the higher degree of uncertainty of policy in Latin American economies, we find a strong preference for offshore assets,” says Citi’s Gonzales.

However, many clients still seek geographic protection without having to go offshore, notes Juliana Laham, chief investment officer at Bradesco Global Private Bank. “Offering global portfolios within local market investments has been a highly successful strategy,” she says. “In these cases, choosing between dollar-based strategies remains an interesting option.”

As Latin America grows into a key battleground for the ultrarich, the same cannot be said of the Caribbean. Due to tighter banking regulation in the US and in the region, several key players have found it challenging to keep their operations running.

The “de-risking” trend has led to the exodus of around 40% of corresponding banks from the region over the past 15 years, according to the Economist Intelligence Unit, reducing its access to global finance offerings.

“The island offshore market is getting increasingly fragmented globally as the US grows increasingly interested in closing financial loops,” Trout says. “That doesn’t bode well for the region, given that most of its AUM growth is not organic to the region as it is for LatAm wealth.”

One side effect of growing demand is that clients are resorting to more banks at the same time. A 2023 paper by the Capgemini Research Institute indicates that UHNWIs maintain relationships with seven wealth management firms on average, up from just three before the pandemic.

Against this backdrop, banks have been stepping up their game when it comes to customer retention.

“It’s not just a question of footprint and scale,” argues Alfonso Castillo, global head of Santander Private Banking. “The value proposition includes innovative global investment products and goes beyond private banking services such as banking for the clients’ companies, real estate advisory, and day-to-day banking.”

“Banks that don’t offer the necessary expertise around trust, philanthropy, and even around very specialized asset classes, such as alternatives, are under the threat of falling short,” Trout warns.

Against this backdrop, the industry is increasingly prioritizing services and comprehensive planning as central components of its offering, aiming to strengthen customer loyalty in the long run. 

However, Trout notes, figuring out the staffing model might pose the most significant challenge for banks looking to “support very specialized needs without being killed by the costs.”

The solution to that problem may be in technology, says Gonzalez: “Artificial intelligence can create models based on the client’s investment preferences and past behavior, then make recommendations and dynamically rebalance the portfolio based on new information or changing market conditions to correct any drifts from the core strategy. As a result, advisers can concentrate on the human-dependent aspects of client relationships: making big decisions, building trust, and understanding client needs and goals.”

Banks face an uphill battle as supply chains remain disrupted, regional conflicts continue to build, and the fear of bank failure returns. Despite this, select financial institutions have threaded the needle and delivered stellar performances to their clients and shareholders over the past year.

JPMorgan Chase takes the top honor as Global Finance’s World’s Best Bank for 2024, as well as the World’s Best Investment Bank and World’s Best Private Bank. The global giant won its laurels thanks to a broad range of client offerings and solid financials while helping to arrest a series of US bank failures with its acquisition of First Republic Bank. Industry leadership, advancements in digitalization and corporate citizenship also factored in.

Throughout 2023, JPMorgan Chase raised $2.3 trillion in extended credit and new capital for its consumer and institutional clients while moving $10 trillion in over 120 currencies daily. For its 6.4 million small-business clients, the bank broadened its suite of payment acceptance offerings, including invoicing and a tap-to-pay option allowing merchants to accept card payments via their mobile devices.

The world dodged a global recession in 2023 as global output growth shrank to 3.3% from 3.5% in 2022, according to the International Monetary Fund’s July World Economic Outlook 2024. Advanced economies, the Middle East and Central Asia and Sub-Saharan Africa suffered dips in growth ranging from 0.9% to 3.4%. Only the emerging and developing economies in Europe and Asia experienced growth, their respective outputs growing by 2% and 0.3%. However, after 12 months of monetary tightening, the global economy is projected to grow 3.2% in 2024 and 3.3% in 2025 as long as inflation remains in check, according to the report’s authors.

The high-profile failure in March 2023 of the regional Silicon Valley Bank (SVB), which relied heavily on uninsured deposits, had many banks checking the models they use to determine asset correlations to which they might be exposed. SVB’s collapse quickly spread to Signature Bank and First Republic Bank, which shared similar characteristics, leading to the second-, third- and fourth-largest bank failures in US history.

The banks “failed as a result of a combination of unrealized interest rate losses from their long-term, fixed-rate assets and the loss of the low-rate deposits that had funded these assets,” Larry Wall, research center executive director of the Atlanta Fed’s Center for Financial Innovation and Stability, explained in a blog post. “Longtime observers of the financial system will see a parallel with the 1980s thrift debacle, in which approximately 1,300 savings and loans and savings banks failed, due in large part to their exposure to interest rate risk and their loss of the low-rate deposits that had been used to fund these assets.”

This time, the failures disproportionally affected the venture capital-backed tech startup sector that these banks catered to. In a letter to UK Chancellor of the Exchequer Jeremy Hunt, the leaders of 180 tech companies said, “The loss of deposits has the potential to cripple the sector and send the ecosystem back 20 years.

The US Federal Deposit Insurance Corporation’s quick response to the banks’ failures stemmed additional contagion and has left businesses with an object lesson in concentration risk.

Along with the World’s Best Bank, global honors this year include awards for Best Corporate Bank, Best Consumer Bank, Best Banks Worldwide in Emerging and Frontier Markets and Best Sub-Custodian Bank. All are being announced here for the first time. Previously announced honors include Best Global Transaction Bank, Best Bank for Sustainable Finance, Best Islamic Financial Institution, Best Investment Bank, Best Cash Management Bank, Best Trade-Finance providers, Best Supply Chain Finance providers, Best Foreign Exchange Provider, Best Private Bank, and Best SME Bank.         —Robert Daly

The editors of Global Finance, with input from industry analysts, corporate executives and technology experts, selected the global winners for the World’s Best Banks 2024 using information provided by entrants as well as independent research based on objective and subjective factors.

Entries are not required, but experience shows that the information supplied in an entry can increase the chance of success. In many cases, entrants present details that may not be readily available to the editors.

Judges considered performance from January 1 to December 31, 2023. Global Finance applies a proprietary algorithm to shorten the list of contenders and arrive at a numerical score, with 100 signifying perfection. The algorithm weights a range of criteria for relative importance, including knowledge of the sector, market conditions and customer needs, financial strength and safety, strategic relationships and governance, capital investment and innovation, scope of global coverage, size and experience of staff, risk management, range of products and services and use of technology. The panel tends to favor private-sector banks over government-owned institutions.

The winners are those banks and providers that best serve the specialized needs of corporations engaged in global business.

In 2023, JPMorgan Chase not only managed to grow its business lines, maintain its fortress balance sheet and continue innovating, but also helped stabilize the US financial system. After last year’s collapse of First Republic Bank, the second-largest bank failure in US history, which followed the high-profile failures of Silicon Valley Bank and Signature Bank, JPMorgan stepped in to acquire a substantial majority of First Republic’s assets for $10.6 billion. The transaction netted JPMorgan approximately $173 billion in loans, $92 billion in deposits, and $30 billion in securities.

Outside that acquisition, the bank generated a net income of roughly $49.6 billion, up about 32% year-on-year, from revenue of approximately $158.1 billion, with solid performances from most business lines. Corporate & Investment Bank, rebranded as Commercial and Investment Bank in January 2024, contributed a net income of $14 billion from $49 billion in revenue. Its Consumer & Community Banking business added a substantial amount of retail branches and advisers and leads the First Republic integration. The Commercial Banking business more than doubled its new client relationships, while the Asset & Wealth Management business increased client assets under management to $5 trillion from $4 trillion the previous year.

JPMorgan also invested significantly in artificial intelligence and machine learning, identifying 400 instances where the technology can improve fraud detection. The bank also minted a Chief Data & Analytics Office,r who has a seat on its Operating Committee and approved adding four new data centers to its existing 32 facilities. Furthermore, the bank has increased its adoption of cloud computing by having 70% of its applications in the cloud, up from 50% in 2022, and 75% of its data stored in the cloud, up from 70% the previous year.   —Robert Daly

Chairman & CEO — Jamie Dimon

https://www.jpmorganchase.com

Despite the global economy dealing with rising inflation, trade conflicts and bank failures, BBVA returned as the World’s Best Corporate Bank award winner for a second year. The bank’s Corporate and Business Banking (CBB) unit contributed €2.25 billion ($2.48 billion) in net attributable profit, a 44.5% year-on-year increase. Geographically, its operations in Mexico and Turkey contributed the most (29% each), while its operations in Spain, South America and the rest of the business contributed 15%, 13% and 15%, respectively. Driving the growth was a 16% increase in net fees and commissions across all businesses.

CBB also saw its cross-border business grow by more than 30% in 2023, fueled by nearshoring operations in Mexico, the US and Asia. The cross-border activity represented over 35% of CBB’s activity for the year.

Wholesale banking cannot be discussed without mentioning sustainability, as the two are tightly intertwined at BBVA. The bank is known for developing inaugural and subsequent green and social bonds for the European and Latin American markets. However, BBVA has expanded its sustainable offerings and created a global unit providing financing for clean technology like hydrogen and biofuels, energy storage, mobility, and carbon-capture technologies; advisory services that evaluate and classify suppliers based on sustainable criteria and the staff’s specialized expertise; and consultation tools like carbon footprint calculators.   —RD

Global Head of Sustainability and Corporate & Investment Banking — Javier Rodríguez Soler

https://www.bbva.com/

Investing in high-growth banking sectors like consumer banking and taking a digital-first approach has paid off handsomely for Standard Chartered, the year’s winner of the World’s Best Consumer Bank award.

The bank’s Consumer, Private & Business Banking unit contributed $2.49 billion in pre-tax underlying profit while increasing its mass retail client base to 9.5 million clients, a million more than the previous year. At the same time, retail product income increased by 26%, and deposit income grew by 74%.

The bank’s digital strategy enables it to provide more personalized, relevant, real-time product offerings and sharpens its onboarding and engagement capabilities. As a result, the percentage of digital sales grew to 56%, up 8% from the previous year.

The bank continues working internally to grow its mass retailbusiness by scaling sustainability through partnerships, digital client engagements and automation. Standard Chartered has eight such mass retail partnerships in production across China, Indonesia and Singapore that serve more than 2.6 million clients. One such partnership is with Singapore’s all-digital Trust Bank, backed by Standard Chartered and grocery retailer FairPrice Group. Since its founding in September 2022, Trust Bank has grown to become the fourth-largest retail bank in the city-state, with a 12% market share, 700,000 clients, and $1.4 billion in deposits.   —RD

CEO, Wealth and Retail Banking — Judy Hsu

https://www.sc.com

Qatar National Bank (QNB) won the World’s Best Emerging Markets Bank award for its growth, digitalization efforts and expansion in emerging markets. In 2023, the bank grew its net profit by 8% to 15.5 billion Qatari riyals ($4.25 billion) while increasing its deposits by 2% to 857 billion riyals and loans by 853 billion riyals.

The bank, which operates in 28 countries on three continents, has taken a cross-pollination approach to digitalization by leveraging intellectual property and technology developed throughout its organization. A prime example is QNB’s digital bank, Enpara. Founded in Turkey in 2012 and recently gaining approval to become a deposit bank, it caters to small and midsize enterprises (SMEs) and retail clients. The experience in delivering products such as deposits, accounts, cards, facilities, transfers and payments helped develop and launch QNB Bebasata digital bank in Egypt, a subsidiary of QNB Alahli, in March 2023. Since going live, the new digital bank ended the year with 20,000 clients.

QNB is also awaiting approval from Saudi bank regulators to launch a digital-only bank in partnership with Ajlan & Bros Holding, targeting SME and consumer clientele. Meanwhile, the bank expanded its presence in Saudi Arabia by opening its second branch in Jeddah. It opened its first branch in the capital, Riyadh, in 2017.

Aside from technology, QNB aims to attract new deposits and grow its wealth management business in its Indonesian operations by offering new products, such as mutual funds, bancassurance and government bonds, which are offered in other markets under the QNB First luxury brand.       —RD

Group CEO — Abdulla Mubarak Al-Khalifa

https://www.qnb.com

Serving over 25 million corporate, commercial and consumer clients across 20 sub-Saharan countries, United Bank for Africa (UBA) has won the World’s Best Frontier Markets award for its service and performance in some of the fastest-growing markets worldwide.

Through its prudent lending approach, robust risk management, and geographic diversification, the bank nearly doubled its deposits to 17.36 trillion Nigerian naira ($10.82 billion) in 2023 from 8.99 trillion naira in 2022. Over the same period, it grew its loan book by 61% to 5.55 trillion naira. As a result, its pre-tax profits rose 277.2% to 757.7 billion naira.

UBA provides micro, small and midsize enterprise financing to approximately 32,000 SME clients, a 45% increase from the previous year. It also provides access to more than 1,000 branches, a network of 2,676 ATMs and roughly 300,000 point-of-sale machines.

To spur regional growth, the bank has pledged up to $6 billion in financing in partnership with the Africa Continental Free Trade Area (AfCFTA) over the next three years to empower SMEs across the continent. It was also one of six African banks that signed a memorandum of understanding with the Pan-African Payment Settlement System (PAPSS) to further growth in trade.

UBA has also implemented “smart automation,” such as robotic process automation and artificial intelligence, to reduce costs, improve productivity and minimize errors. Several more examples are in development.            —RD

Group Managing Director/CEO  — Oliver Alawuba

https://www.ubagroup.com

With deep resources and outstanding post-trade capabilities, CIBC Mellon is again recognized as the Best Sub-Custodian Bank award winner. In addition to custody, CIBC Mellon’s investment-servicing solutions also provide clients with multicurrency accounting, fund administration, recordkeeping, pension services, securities-lending services, foreign exchange settlement, and treasury services. Scale and automation are critical elements for a sub-custodian to deliver efficiency and security in the settlement process.

CIBC Mellon continues to refine its business model by leveraging the most advanced technology. As the product of a 50/50 joint venture between BNY Mellon’s and CIBC, significant resources are available that contribute to infrastructure and process enhancements for the automation and standardization of services.

One example is CIBC Mellon’s adoption of BNY’s Nexen digital information-delivery platform, which uses data analytics services to help clients by giving faster, real-time cash position and activity reporting through an improved interface for easier access from any mobile device. The firm continues to bring BNY’s technological advancements into global custody by using trade analytics to reduce the impact of trades that settle late. As millions of trades are settled each month, there are significant costs associated with late settlement. To help determine the probability of a trade settling late, CIBC Mellon uses a predictive AI engine, thus increasing market efficiency and cost savings for clients.

Leveraging data analytics is a priority. CIBC Mellon’s recently announced strategic collaboration with Duco, a leading software-as-a-service provider of AI-powered data automation, will contribute to lowering operational risk and streamlining processes for greater efficiency.   —David Sanders

CEO — Mal Cullen

https://www.cibcmellon.com/

Bank of America (BofA), our award winner as Best Bank for Transaction Banking and Best Bank for Collections, works closely with large global organizations that have accounts in multiple currencies, helping them to create liquidity strategies to optimize working capital and weather unpredictable market dynamics. According to Mark Monaco, head of Global Transaction Services, it involves bringing awareness of BofA’s existing solutions, built over the years, and then proactively advising clients on which ones address the various challenges they may face, such as forecasting, increasing costs, and the need to optimize return on cash. “Many corporates have limited experience dealing with uncertainty, especially when combined with very high interest rates, and are unsure how to plan or adjust,” says Monaco. “Some may lack the appropriate treasury management solutions or may not know how to maximize liquidity process efficiency.”

Higher interest rates make unplanned funding shortfalls more expensive, he adds. “These shortfalls are more likely if a company has not fully automated its processes. Resistance to making operational investments when interest rates are high results in many companies looking to cut costs and becoming hesitant to make substantial investments in treasury management solutions.”

As rates change, treasurers may be unsure about how to continue optimizing the value of cash balances and may fall back on “safe” approaches that may not be flexible enough to keep up with the changing economic environment.

Monaco says that in addition to rising rates, high inflation increases the cost of goods and services, eating into liquidity and cash reserves.

“Another factor impacting the delivery of treasury and cash management solutions is the rapidly changing regulatory environment,” adds Monaco. “Across the world, markets are facing new compliance obligations spurred by developments in real-time payments schemes, AML/KYC [anti-money-laundering and know-your-customer measures], cyber threats, sanctions compliance, and data sharing and localization. Companies and their partner banks are having to enhance and improve both infrastructure and processes as a result.”

BofA brought all payments activities under a new Global Payments Solutions division in recognition of the strategic importance of payments to the bank.     —Gilly Wright

Head of Global Transaction Services — Mark Monaco

https://www.bankofamerica.com

Societe Generale (SocGen) bolstered its reputation for sustainable finance innovation in November when it served as sole manager of the first digital green bond ever issued. The €10 million senior preferred unsecured bond was tokenized and directly registered by SG-Forge on the ethereum public blockchain. Blockchain, says SocGen, can potentially increase the traceability and transparency of ESG-related bonds for both issuers and investors.

SocGen also stands out for its reach and versatility. Last year, it was active in ESG projects on all six inhabited continents, including many parts of Africa, and it remains one of the few commercial banks that has ever issued green, social and sustainable bonds, according to Natixis.

In the project finance sphere, the bank was active on many fronts in 2023, including in October as sole debt financial adviser and mandated lead arranger on Automotive Energy Supply Corporation’s €873 million battery storage factory in France’s Battery Valley. Elsewhere, it helped finance offshore wind projects in Poland and South Korea; onshore renewables in Japan, Australia, Egypt and Vietnam; and critical materials projects in Mongolia and Africa.        —Andrew Singer

Global Head of Sustainable and Positive Impact Finance Solutions — Eric Bonnin

https://www.societegenerale.com/

Kuwait Finance House (KFH) earned its recognition as Best Islamic Financial Institution worldwide thanks to innovation in Islamic financing, a wide geographical footprint and strong operations. KFH is the second-largest Islamic bank globally, providing services to customers in the Middle East, Asia and Europe through extensive distribution channels. It has subsidiaries in Kuwait, Turkey, Egypt, Bahrain, Iraq, Malaysia, the UK and Germany.

Last year was KFH’s first full year of integration following its 2022 acquisition of Ahli United Bank of Bahrain. Total assets stood at 37.87 billion Kuwaiti dinars at the end of 2023, as net profit jumped to 672 million dinars from 428 million dinars, for a return on average assets of 1.8%. The firm’s overall financial profile is solid, supported by good capitalization and liquidity. Its Islamic banking products and services cover commercial, retail and corporate banking as well as real estate, trade finance and investments.

During 2023, KFH launched Tam Digital Bank, Kuwait’s first Shariah-compliant digital bank. It was also at the forefront in launching several digital services, including detecting biometric facial features in branches, instant printing for all types of cards, its Zaheb digital platform and KFHonline for corporates, digital portfolios to facilitate e-payment and a D-POS device for instant opening of bank accounts.   —Darren Stubing

CEO — Abdulwahab Iesa Alrushood

https://www.kfh.com

With a highly skilled team of investment bankers, J.P. Morgan remains undeterred in the face of geopolitical turmoil to provide exceptional investment banking solutions. In 2023 when, according to Dealogic, global investment banking fees for the industry fell 16% to $66.5 billion, J.P. Morgan was able to retain its top position in global investment banking revenue, capturing an 8.7% revenue market share. Regionally, the bank retained the top spot in Europe, the Middle East and Africa. In the Asia-Pacific region, apart from Japan, the bank rose to be top fee earner from the fourth position, year-over-year, with improved performance in Southeast Asia, South Korea, India, Malaysia, Singapore and Australasia. This success is the result of a deep and talented team of bankers. J.P. Morgan recognizes the importance of developing its staff by rotating senior management to broaden their roles. The firm recently announced new and increased responsibilities for some key executives to position the investment bank for future success and growth. —DS

Co-CEOs, Commercial & Investment Bank — Jennifer Piepszak and Troy Rohrbaugh

https://www.jpmorgan.com/

Citi, our winner as Best Bank for Cash Management, recently combined Treasury and Trade Solutions and Securities Services under one umbrella. At the June Citi 2024 Services Investor Day, Shahmir Khaliq, head of Services, noted that “it made sense to bring these businesses together under one portfolio, as they have strong synergies across our entire institutional client base.”

“Our clients are looking for fully integrated solutions across the entire continuum of accept, hold, pay and finance as they look to scale quickly and globally,” added Debopama Sen, head of Payments at Citi, at the time. She added that acceptance capabilities are powered by Spring by Citi, an end-to-end digital payment acceptance solution. Hold capabilities include integrated liquidity and a banking-as-a-service offering that allows e-commerce clients to serve their merchants and seller customers. Payment solutions then enable clients to manage payouts globally, including navigation of cross-border complexities. And finally, Sen pointed out that for finance, Citi offers tailored offerings for e-commerce businesses, including the ability to offer flexible financing options and working capital management solutions.        —GW

Head of Services — Shamir Khaliq

https://www.citigroup.com/

With comprehensive trade outsourcing services, BNY Mellon is the bank of choice for other financial institutions looking to avoid high costs without losing trade finance customers. To limit compliance costs, for example, many financial institutions worldwide have restricted the number of Swift’s Relationship Management Application (RMA) exchanges they maintain with their correspondent banks. BNY Mellon developed RMA as a service to help banks route their Swift MT 700 letter of credit messages directly to the beneficiaries’ banks, using BNY Mellon as an intermediary bank for their letter of credit activity.

A multibank supply chain finance program that includes collaboration with fintechs ensures cash optimization for corporate buyers and supports the working capital needs of their suppliers.             —GW

Managing Director and Global Head, Trade Finance Product & Portfolio Group Manager — Joon Kim

https://www.bny.com

Present in over 90 countries, Citi’s supply chain finance (SCF) network supports over 4,000 buyers and 95,000 suppliers. In business for almost 20 years, Citi Supplier Finance’s offering includes digital platforms that streamline processes, seamless technical implementation that is adaptable to various enterprise resource planning (ERP) systems, and effortless electronic onboarding of suppliers. Recent additions include Citi Dynamic Discounting, which enables cash-rich clients to invest excess liquidity directly into their supply chain and provides liquidity to small and midsize suppliers to improve cash flow. Citi provides a single platform and file transmission for both SCF and dynamic discounting. For suppliers, Citi Supplier Finance offers an app that selects receivables to be discounted via mobile phone.     —GW

Managing Director, Head of Trade and Working Capital Solutions — Chris Cox

https://www.citigroup.com/

Last year was nothing short of historic for our Best Global Foreign Exchange Bank, UBS. Between the takeover of its longtime rival, Credit Suisse, in what analysts call the most important banking M&A in history, and the substantial growth of its foreign exchange (FX) operation in developing markets, the behemoth bank has done it all with unrivaled excellence.

The takeover of its rival’s operation led to substantial growth in clientele and traded volume in European markets, resulting in solid profitability growth. It also led to key additions to UBS’ FX team, further expanding the bank’s knowledge.

At the same time, UBS teams in Asia, the Middle East,and Latin America have kept working relentlessly to improve the bank’s digital offering for emerging market currencies.

As a result of this unmatched year, the Swiss-based giant now ranks as one of the largest private wealth managers in the world, with undisputed market share in Europe. It has also watched its emerging markets FX operation expand into one of the world’s largest, expanding the bank’s offerings to its clients worldwide.

Among the bank’s most significant global technological breakthroughs is UBS’ FX Engine Room, with which the bank can place all analytics in one place for use by its global sales force, thus broadening the footprint of its operations to clients looking to trade currencies on a global scale. —Thomas Monteiro

Group CEO — Sergio Ermotti

https://www.ubs.com

This year’s volatile macroeconomic backdrop did not phase our back-to-back award winner, J.P. Morgan. The global behemoth seized the opportunities that volatility afforded, posting phenomenal growth.

With an increasing focus on high-end clients, JPMorgan Chase’s wealth management division grew its net income an impressive 36% year-on-year (YoY) in the first quarter of 2023, 22% in the second, and 16% in the third. A key driver was JPMorgan Chase’s acquisition of failing First Republic Bank in May 2023, a move that calmed the threat of a deeper crisis in the US banking industry.

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

CEO — David Frame

https://privatebank.jpmorgan.com

For the second year running, the Brazilian digital bank BTG Pactual Empresas has swept the Best SME Bank awards for Brazil, Latin America and the world. The bank has eased access to capital for micro, small, and midsize enterprises (MSMEs), representing approximately 90% of Brazilian companies.

Clients get a low-touch digital channel, available 24/7, that nevertheless provides a high-touch experience using open banking standards and Brazil’s PIX instant payment system. For example, BTG Pactual Empresas has shortened the time needed to obtain credit to about 30 minutes for clients participating in rural credit programs, solar-power and green financing, and women-owned businesses. Newly opened SME accounts are operable within an hour.

Once an SME account is open, account owners can export their banking data to standard spreadsheets, Microsoft Excel and Google Sheets, and enterprise resource planning (ERP) applications, instantly reconciling accounts in their ERP systems.

BTG Pactual Empresas provides such additional services as single-sign-on multiuser and multi-business accounts, online invoicing, collection management, budgeting capabilities, foreign currency exchange and digital receipts, along with payroll, insurance, and tax and investment services. Clients can reach expert support anytime via chat, email, WhatsApp and toll-free calling.             —RD

CEO — Roberto Sallouti

https://empresas.btgpactual.com

With Belarus’ economy increasingly integrated into that of Russia, it makes perfect sense for the National Bank of the Republic of Belarus (NBRB) to proceed with plans to introduce a digital Belarusian ruble linked to the Russian currency. Although plans at the time of writing are sketchy, it is understood transactions will be classified as noncash settlements. However, Chairman Pavel Kallaur has said that other steps will be taken to improve the economy’s overall efficiency and maintain the high levels of bank lending.

“To form a stable resource base for banks necessary to expand lending, measures will be taken to develop the long-term deposit market, as well as to increase the share of ruble savings,” he said in a speech before Parliament in late June.

This lending is helping to boost GDP growth, which was 3.9% in 2023. The government expects it to be around 3.4% this year, although the International Monetary Fund (IMF) is forecasting a more modest 2.4%.

This year, Kallaur marks 10 years as governor of the NBRB, during which he has worked closely with the country’s president, Alexander Lukashenko. Price controls have remained on certain goods monitored by the NBRB, while keeping a close eye on inflation is given high priority. The inflation target for 2021-2025 is 5%, and the IMF expects the rate to reach 6.3% this year, going up a little to 6.5% for 2025.

On January 3, Jasmina Selimović was appointed as the new Governor of the Central Bank of Bosnia and Herzegovina (CBBH) for a six-year term. She replaced Senad Softić, who had extended by three years his official six-year term started in 2015. Early signs are that the new governor aims to continue Softić’s reliable stewardship of monetary policy. In her inaugural speech, Selimović stressed the need for stability and a continued striving for transparency, reiterated in her first meetings with officials of the European Union and the IMF.

Monetary policy in Bosnia and Herzegovina has been stable for a long time, with a currency board in place for more than a quarter of a century, and no change is expected. Selimović emphasizes the need for the currency, the convertible mark, to remain stable and convertible—prerequisites for financial stability and economic prosperity. Macroeconomic fundamentals have improved recently, with real GDP growth expected by the IMF to accelerate in 2024-2026 from 2.5% to 3%, a bit higher than forecast by CBBH six months ago. Inflation is projected to ease from an average of 3% in 2024 to 2.7% next year. There are plans—but no clear timetable—for Bosnia and Herzegovina to join the Single Euro Payments Area, dramatically reducing the cost of sending money to and from the EU.

The June 2024 European Commission convergence report confirmed further progress toward eurozone membership, the expected culmination of decades of alignment with EU standards and policies. The main sticking point now appears to be inflation. Harmonized consumer price inflation in May (5.1%) exceeded the ECB’s tolerance threshold (3.3%). Over the coming months, the expected narrowing of the gap may prompt the caretaker government (resulting from inconclusive parliamentary elections) to request another impromptu official assessment soon. However, clearing the inflation hurdle may prove difficult and elusive.

Like the EU, Governor Dimitar Radev of the Bulgarian National Bank (BNB) is concerned about longer-term price pressures emanating from an expansive fiscal policy. He has stressed the need for “a pro-European government with a sufficiently broad support and action horizon,” with both issues clearly linked. In that respect, progress has gone into reverse. As the June 2024 parliamentary elections produced an inconclusive outcome, a return to the polls is scheduled for October. It will be the seventh parliamentary election since 2021. The political malaise and institutional stalemate may also explain the delay in finding a successor for Radev, whose original six-year term ended in July 2021. In 2023, he was reappointed for another six years. Radev’s longevity may yet prove beneficial in a fluid political situation.

The Czech National Bank (CNB) has a reputation as one of the most conservative in the region, and its cautious actions over the past year have been consistent with this. Having presided over a rise in interest rates over 2022-2023 to counter inflationary pressures, it has since overseen a fall in rates to 4.25% by September 2024.

Given that its main priority is price stability—with a target range of 1%-3% for inflation—the CNB under Governor Aleš Michl can be happy with the outcome. By June 2024, inflation was 2%, down from May’s 2.6% and below market expectations. Since then, it has stabilized at 2.2% over July and August. Michl expects it to remain stable this year and into next, led by falling food and drink prices, among other things. This should enable a further gradual easing of interest rates by year-end.

Michl sees price stability as the cornerstone of a broader economic strategy incorporating a pragmatic fiscal policy, reflecting the Czech Republic’s close integration with the eurozone and Germany (despite remaining outside the euro). He seems well aware of the challenges facing the country. These include relatively anemic growth—just 0.7% at best expected this year, rising to 2% in 2025—but also accelerating real wages and labor shortages, which could be an inflationary trigger. Monetary policy will need to be responsive to this reality.

The central bank of Denmark (Nationalbanken), hit its 2% inflation target without more-significant economic deceleration in 2024. Following the lead of the European Central Bank (ECB) on interest rates to prevent currency devaluation, the country started its monetary easing cycle in June, cutting interest rates by 0.25% then and again in September.

The country’s most recent numbers signal a stable overall economic outlook, with inflation at 1.4% in August and annual GDP growth projected at 2.1%. Unemployment, however, rose slightly from a steady 2.5% to 2.6% as of July. One of the main secrets behind the country’s above-average performance is a sustained increase in employment, resulting in upward revisions of growth forecasts and a more substantial budget surplus.

The country’s economy was significantly boosted by its thriving pharma industry, with Bagsværd-based global leader Novo Nordisk becoming Europe’s largest company by market cap in early 2024.

In a June announcement, Nationalbanken says that the current “economic progress raises expectations for the Danish economy in 2024.”

Christine Lagarde’s term at the ECB’s helm has significantly shifted for the better in 2024.

After a difficult 2023, when geopolitical pressures gathered with tight monetary conditions to create a near-stagflationary environment in the eurozone, the central bank has managed to inch much closer to its 2% target with successive consumer price index (CPI) readings under 3% since February of this year, down to 2.4% in August.

Against the improving backdrop, Lagarde seemed to have anticipated the US Federal Reserve’s September rate cut by starting its easing cycle in early June, lowering the eurozone’s interest rate by 25 bps to 4.25% and then in September to 3.65%.

Lagarde had left rates unchanged in July and August due to the potential devaluation of the euro currency against the US dollar.

Nonetheless, the new monetary cycle has already impacted the ECB’s GDP expectation for the euro area, which is now projected by the IMF to grow 0.8% in 2024 and 1.5% in 2025, significantly better than 2023’s 0.4%.

On the inflation front, the ECB has already gone below its 2.5% projection for 2024 and now projects it at 2.2% in 2025.

Acting head of the National Bank of Georgia (NBG) since June 2023, amid controversy over what was regarded as a highly political appointment, Natia Turnava has yet to be formally appointed governor. But that has been the least of her problems, as she and the NBG have been dragged into Georgia’s increasingly bitter political divisions.

Questions were raised over her judgment in September 2023, when she failed to enforce international sanctions on Georgia’s former prosecutor general Otar Partskhaladze—who has close connections to Russian President Vladimir Putin—claiming that the freezing of a Georgian individual’s assets could be enforced domestically only by a Georgian court. Her controversial stand led to three top-level resignations from the NBG and a rebuke from Georgian President Salome Zurabishvili, who called on her to resign.

Turnava has also been obliged to spend foreign currency to prop up the lari last May, despite fierce opposition from all other political parties, the president, and the EU, which subsequently suspended membership negotiations with Georgia. This was at the height of antigovernment demonstrations against the country’s so-called foreign agents law. According to Fitch Ratings, international reserves dropped from a peak of $5.4 billion in August 2023 to $4.6 billion in June of this year, that decline beginning soon after the start of Turnava’s tenure.

She has done nothing to dispel concerns about her conduct last September, and her closeness to the governing Georgian Dream party has undermined confidence.

In June, Fitch Ratings warned that “perceived risks to the independence of the NBG could erode policy credibility, potentially weakening the capacity of Georgia’s small, open and dollarized economy to respond to external shocks.”

As regards monetary policy, the NBG has followed a broadly tight strategy, with rates cut to 8% in May, against inflation of 2% at that time, although high levels of dollarization impact policy transmission. Inflation peaked at 2.2% in June, then subsided to 1% by August.

The reputation of the central bank of Hungary—the Magyar National Bank (MNB)—took a battering last year, and that of its governor as well. Hungary had high inflation—25.7% at its peak. The full year of 2023 saw a GDP contraction of 0.9%. Criticism of the MNB’s complex interventions was also rife, with observers saying they complicated monetary policy and often simply did not work.

The governor’s term in office finishes in early 2025, and 2024 has been quieter than 2023, with inflation and interest rates returning to normal ranges. Average inflation this year is expected by the IMF to be 3.7% against 17.1% last year; while interest rates have fallen sharply, by half, from 13% in October 2023 to 6.50% in September 2024. Growth is projected at 2.2% in 2024, going up to 3.3% next year. Governor György Matolcsy seems unlikely to make many more interest cuts this year.

“The pace of cuts is set to slow over the remainder of 2024, with the central bank emphasizing the importance of positive real rates and stability of the financial markets,” wrote Fitch in its June 2024 report on Hungary.

However, Matolcsy—a former close ally of Prime Minister Viktor Orbán who fell out with him in early 2024 over Orbán’s plans to increase government oversight of the MNB, which the governor said would compromise its independence—may yet surprise markets. With Matolcsy and the government blaming each other for Hungary’s poor economic performance, and with discussions over the oversight laws due to resume in the autumn, further interest rate cuts could happen, as Matolcsy will likely want to leave the MNB in 2025 on a high note.

While most central banks around Europe have already begun to inch closer to their inflation targets, the Central Bank of Iceland continues to lag.

In its latest inflation estimate, in August, the Nordic island’s CPI inflation marked a hefty 6%, still nowhere close to the central bank’s 2.5% on-average target.

After a 4.1% year-on-year jump in GDP for 2023, the country posted a meager 0.6% quarter-on-quarter growth in February and a desolating -4% in May.

In its August statement, the central bank expects the battle against inflation to continue: “The current monetary stance is sufficient to bring inflation back to target, but persistent inflation and strong domestic demand call for caution.”

The central bank of Norway, Norges Bank, has continued to march toward its 2% inflation goal, albeit facing growing signs of a broader economic deceleration.

In its most recent CPI report, the Nordic country posted prices that continued to moderate, at 2.6% in August.

Despite that, the country hasn’t started to cut rates, maintaining a fairly strict 4.5% policy rate, the high point that was reached in December, 1.9% in real terms.

After a positive 2023 for the country, the tight monetary stance has started to affect the broader economy. According to the latest readings, GDP in Q2 jumped to 4.2% from Q1’s 0.9%, while unemployment had dropped to 3.8% in July, but grew again to 4% in August.

Matthew Schneider, an economist at Moody’s Analytics, believes we’re still far from seeing a pivot from the central bank. “After pushing back our expectations for the timing of these cuts to September, hawkish language from the committee today suggests that rate cuts may come even later than anticipated,” Schneider explains.

National Bank of Poland (NBP) Governor Adam Glapiński, 74, who started his second term in 2022, has presided over an inflationary environment that decreased and increased again over 2024. The CPI, which the IMF estimates at 11.4% for 2023, is projected to fall to 5% for this year, remaining at that level in 2025, above the target of 1.5%-3.5%. Growth has returned to the economy, too, with GDP expected by the IMF to rise 3.1% this year against 0.2% in 2023.

In June, Glapiński appeared to take a firm line against inflation—sustained by high energy prices, the imminent removal of a price gap, and continuing wage pressures—saying there is no chance of a cut in the current 5.75% rate this year or even next. However, as Fitch Ratings points out, he faces a difficult balancing act.

The past year has been an uncomfortable one for Glapiński and the NBP. Prime Minister Donald Tusk, who swept into government for the second time in the October 2023 elections, has accused Glapiński of politicized policymaking because of his controversial decision to drop interest rates by 0.75% to 6% in September, ahead of the October vote, despite an unpropitious environment with high inflation.

Glapiński—who was appointed by the previous Law and Justice Party (PiS) government and is a personal friend of its chairman, Jarosław Kaczyński—denies the accusations; but, at the time of writing, he could still face government prosecution despite the constitutional court ruling in January that the governor of the National Bank of Poland cannot be put in front of a tribunal.

You don’t get to remain a highly respected central bank governor for well over 30 years without being a survivor, and Mugur Isărescu, 75, has proved that over the past year. He has been governor of the National Bank of Romania since 1990—except for an 11-month hiatus as prime minister from 1999 to 2000—and has been cautious. The world’s longest-serving central bank governor is expected to be given another five-year term in a vote scheduled this fall. His recent record has been solid.

According to ING, most forecasts suggest this year will see an increase in GDP of between 2.5-3%, with total GDP expected to double over the next decade. Isărescu’s concern, however, is that although food and fuel prices have fallen since 2023, inflation remains sticky with the price of services, rising real wages, strong demand for imports, and continuing expansionary fiscal policy all possible triggers for this persisting into next year at around 4.5%-5%.

However, after a slight drop in inflation to 5.1% in May, July saw a reduction of 25 basis points to 6.75% and another 25 bps cut in August, to 6.5%, hinting that any subsequent reductions later in the year would be equally small. Isărescu maintains that it is best to err on the side of caution rather than having to reverse any interest rate cuts later.

Despite hitting 1.9% in its August inflation read, thus approximating the 2% target inflation rate, the latest batch of economic data paints an increasingly worrisome picture for the historically solid Swedish economy.

Unemployment was down to 7.9% in August, from a high of 9.4% in June; and first-quarter GDP rebounded to 0.7% from a -0.1% drop in Q4 2023. Pressure on the Riksbank to deepen its rate cut cycle, which started in May this year with a cut to 3.75% from 4.00%, is growing by the day.

Against the worrisome backdrop, Governor Erik Thedéen brought the policy rate further down, to 3.5% in August and 3.25% in September, saying that he saw the Riksbank cutting two or three more times this year.

“I see it as more likely that we will be able to make three—rather than two—full rate cuts so that the policy rate amounts to 2.75 per cent after the December meeting,” said Thedéen at the time of the August cut.

The first major central bank to cut rates in 2024, the Swiss National Bank (SNB), has kept setting the trend for the rest of the developed world by achieving a perfect balance between economic growth and inflation.

Despite lowering the SNB’s benchmark rate to 1.25% at its June meeting—its second 25 bps rate cut of the cycle—Governor Thomas Jordan still delivered an impressive streak of inflation readings under 1.5% this year, sustainably below the bank’s 2% target. The SNB cut another 25 bps in September.

And if that weren’t enough, the milestones were accompanied by an impressively low unemployment rate, 2.4% in August, which displayed the overall resilience of the country’s economy.

The main worry now lies on the GDP front, where the country had recorded successive quarter-on-quarter readings below 0.5% since the third quarter of 2022, rising above that to only 0.7% in this year’s second quarter. But the SNB should have space for further rate cuts this year, and the bank’s next governor, Vice Chairman Martin Schlegel who will start Oct. 1, said he would stick with the bank’s price stability goals.

 Fatih Karahan, who took over as governor of the Central Bank of the Republic of Turkey (CBRT) on February 3, has shown even greater determination than his short-lived predecessor—Turkey’s first female governor, Hafize Gaye Erkan, who left for several reasons, including personal—to bring inflation to heel. The complex web of unorthodox financial regulations imposed over the past few years has been dismantled. Karahan has been working closely with respected Finance Minister Mehmet Simsek to present a united policy front and reassure markets. In six years, Turkey’s sixth central bank governor has been at pains to stress that mainstream monetary policy will now be the order of the day.

That said, Turkey’s biggest problem—inflation—shows little sign of being defeated, though it has come down to 49.38% as of Septemeber, from its high of 75.45% in May. Meanwhile, interest rates have been at 50% since March, after nine consectutive increases. These stratospheric rates have left the relatively low rates of the unorthodox, pre-Erkan era behind, when the key rate stood at 8.5% prior to June 2023. These rates have attracted large inflows of foreign fare unds, with the Turkish lira becoming the most-traded emerging market currency in mid-2024. Around $12.5 billion has also been attracted by Turkish government bonds.

However, the CBRT insists that inflation will continue to fall substantively throughout 2024 and into 2025. For this reason, fiscal policy is also being overhauled, with Simsek announcing a comprehensive new corporate tax regime in July 2024 to complement further monetary tightening.

At the CBRT’s May rate-setting meeting, the bank announced a series of liquidity tightening measures—including foreign exchange–protected deposit accounts and new higher reserve requirements for the lira—aimed at supporting the bank’s tight money policy, which it said would continue until there were clear evidence of a substantive fall in inflation and inflationary expectations. For 2024, the IMF forecasts inflation to drop from 38.4% in 2025 to 22.4% in 2026. Monetary tightening is expected to impact growth, which is now likely to be a “more sustainable” 3.1% this year against the 4.5% recorded over 2023 and the 4% initially expected by the government.

In a surprising turnaround from 2022’s highly unfavorable backdrop, the Bank of England managed to reach its 2% inflation target and sustain it through May and June, then remain close to that through August, indicating that the worst may be over for the country’s once-escalating consumer prices.

Although consumer prices ticked slightly upward to 2.2% in July, the context remains highly supportive of a deeper rate-cut cycle, particularly given that economic growth has remained largely subdued, albeit posting a positive 0.9% quarter-on-quarter increase in July, up 1.2% year-on-year. Governor Andrew Bailey made the first rate cut of the interest rate cycle in August, bringing the base rate from 5.25% to 5% and confirmed this in September. However, he refused to shed light on the pace of the rate-cut cycle as a whole, saying that the “job is not done on the inflation front.” He focused on the stickier core of inflation as the argument to remain data-dependent going forward.

Global Finance: Denmark’s inflation rate has dropped significantly from a high of 10% in late 2022 to stabilizing below 1.5% this year. What do you attribute to this better-than-average performance?

Christian Kettel Thomsen: The inflation job is basically done in Denmark after a series of unprecedented shocks led to extraordinarily high inflation in 2021-2023. Let me first offer some possible global explanations behind the road back towards price stability before turning to the specific Danish experience.

Despite the highest inflation in more than 40 years across advanced economies, medium-term inflation expectations generally remained well-anchored, underpinned by aggressive global monetary policy tightening and the credibility of independent central banks. In my view, this is a major difference compared to the past inflationary episodes of the 1970-80s, and key to understanding the nature of the rapid descent from the recent global inflationary surge which has so far occurred with surprisingly few negative effects to growth, employment, and financial stability. Aside from well-anchored inflation expectations, fading supply disruptions and restrictive economic policy also helped restore a better balance between aggregate demand and supply at the global level.

In Denmark, monetary policy is conducted with the aim of maintaining a fixed exchange rate vis-à-vis the euro. As such and over time, we import price stability from the euro area, which provides a focal point for analyzing our inflation development. Danish inflation has dropped faster than in the euro area in 2023-2024 amid a more rapid fall in energy prices, which has reduced price pressures both directly and indirectly via lower production costs, i.e., it appears that an asymmetric reaction in energy prices to a common shock helps to explain the low Danish inflation rate.

There has generally been substantial heterogeneity in the evolution of energy prices lately as EU countries differ in terms of market structures and fiscal measures taken to alleviate the impact of higher energy prices on households and businesses. Other idiosyncratic factors may also contribute to the low Danish inflation compared to the euro area. At the current juncture, goods inflation is for example particularly weak in Denmark. 

Despite strong wage growth, underlying inflation remains modest, suggesting that profit margins may have absorbed the higher labor costs to a greater extent than originally anticipated.   

Nevertheless, we expect Danish inflation to increase somewhat in the near-term as some of the wage increases feed through to consumer prices amid on-going labor market tightness, before stabilizing around 2% over the coming years.

GF: Do you plan to maintain the current interest rate differential with the Eurozone, or is there room to widen the gap, particularly with inflation now firmly under control?

Thomsen: Denmark has maintained a fixed exchange rate regime since 1982. First towards the German D-Mark and since 1999 towards the euro.

National Bank of Denmark’s mandate is to ensure stable prices by pegging the Danish krone to the euro. As part of the fixed exchange rate system, our monetary policy tools are reserved solely for maintaining the exchange rate between the Danish krone and the euro within a narrow band. Therefore, the interest rate cannot be used to stimulate the economic activity. We only change the policy rate spread to the euro area to secure the fixed exchange rate policy.

Even though pressure on the labor market is easing slightly, we are still in a situation of very low unemployment. Consequently, monetary and fiscal policy should contribute to an appropriate development in the business cycle in Denmark.

GF: As the global rate-cut cycle gains momentum, have you adjusted Denmark’s base economic projections for GDP growth and employment?

Thomsen: In our latest projection from September, assumptions about the global rate-cut cycle are generally in line with our assumptions from our previous projection—in March. Overall, recent developments support our projection from March, hence, our latest projection is generally similar to the one in March. However, employment has surprised to the upside.

During the past two years, Danish GDP growth has been supported by strong growth in the pharmaceutical sector which to a large extent can be attributed to production outside Denmark by Danish-owned companies. On the other hand, growth in most other parts of the economy has been relatively muted, which has resulted in less capacity pressure in the economy.

Despite sluggish activity growth, employment has risen at a higher pace than what normally would be expected. Large inflows of foreign labor and increases in the pension age have supported employment growth and contributed to an expansion of the labor force.

Going forward, we still expect high growth in the pharmaceutical sector to contribute to Danish GDP growth. At the same time growth on Danish export markets, further easing of monetary policy and higher real wages are expected to support growth in the Danish economy more broadly. In our September projection we expect GDP growth to be 2.1% this year, rising to 2.3% next year.

Employment is therefore expected to keep rising, supported by growth more broadly in the Danish economy. However, we expect employment to grow at a slower pace than seen during the past two years. This contrasts with our projection in March, where we expected a small decline in employment in 2024 and 2025.

GF: With Novo Nordisk now the largest company in Europe, do you see a risk of the Danish pharma industry becoming “too big to fail”? If so, how are you addressing that concern?

Thomsen: Novo Nordisk has a significant and growing impact on the Danish economy, which we fundamentally view as positive. This is also true for other large Danish companies that are successful internationally.

At the same time, we need to be mindful of how these companies influence various macroeconomic factors such as GDP, productivity and the balance of payments, so that we get an accurate picture of economic development. This is what we do, for instance, when we present figures that exclude the production these companies have abroad. At National Bank of Denmark, we are particularly concerned with the impact Novo Nordisk’s activities have on domestic capacity pressures, which ultimately affect inflationary pressure.

We do not believe that capacity pressures in Denmark have increased to the same extent as Novo Nordisk’s overall growth in the short term, as much of the activity and corresponding employment occurs in factories abroad under Danish ownership. In other words, we do not assess that the Danish economy is entirely dependent on Novo Nordisk.

Pegged 1-to-1 to the US dollar, the Meli Dolar aims to leverage the electronic marketplace’s significant presence in Brazil to establish a dominant position in the country. Propelled by Meli’s already massive clientele base, the next step is to expand the offering to the remaining countries in the region.

“The Meli Dolar is an open solution from Mercado Pago, which has a unique capacity to scale financial products and services for everyone,” explains André Chaves, senior vice president at Mercado Pago, the Mercado Libre subsidiary responsible for the operation.

Foreign currency-backed stablecoins are widely seen as the next big thing in Latin America. Stablecoins let customers seamlessly protect themselves against the massive fluctuations of the region’s fiat currencies and escape the typically high fees of opening an international currency account.

Although Brazil has so far served as the focus of the region’s stablecoin operations due to its softer regulatory environment and massive digital banking clientele, other markets have also experienced enormous development.

Such is the case of Argentina, home to the first all-local dollar-pegged stablecoin, the Criptodólar, which Ripio launched at the beginning of August. The offering addresses one of Argentina’s most challenging problems—the black market for currency exchange, which subjects Argentinians to different exchange rates.

Mexico, although under a more challenging regulatory environment, is widely seen as the market’s next frontier due to its massive US-dollar remittances. Recently, Brale launched the MXNe, the first Mexican peso-backed stablecoin, which operates on the Solana and Stellar crypto platforms. However, as Latin America’s stablecoin market gains traction partly due to legislative gaps, experts expect regulatory scrutiny to increase. As Erick Rincón Cárdenas, director of TicTank at Universidad del Rosario, notes, “Central banks might see this as a potential replacement for activities within the regulated financial system and could move to restrict certain operations, like currency exchanges.”

Since assuming office at the peak of the republic’s inflation crisis in 2022, CNB Governor Aleš Michl has been implementing a unique and rather unorthodox strategy to combat price hikes.

First, he put a damper on further interest rate hikes, saying he would promote a well-communicated stance of higher rates for longer rather than the former “rushed, volatile, ad-hoc policy moves and experiments.”

Michl, formerly a co-founder of an algorithmic asset-management fund, went on a media campaign focused on lowering inflation expectations. By talking to Czech tabloids and through social media outlets including Instagram, Facebook, and X (formerly Twitter), he communicated to the public that the problem was a supply chain bottleneck that would reverse as soon as the post-Covid crisis demand for goods returned to normal.

The height of the campaign came when Michl appeared on a Facebook post by the CNB using a ketchup bottle to explain his analysis.

“It’s like opening a new ketchup bottle,” he said, “turn it over and nothing comes out, the ketchup is stuck in the bottle. This shortage of goods led to rising prices. When the problems in the supply chains are solved and demand normalized, there is a surplus of goods: similar to when the ketchup finally flows out of the bottle, but much more than you wanted.”

The other part of Michl’s plan was to strengthen the Czech koruna, on the theory that a heavy flow of euros into the economy at a higher price was partly to blame for the price increases.

Despite hitting the 2% inflation target twice in the last three readings, Michl still sees a long way to go before claiming victory over inflation. “My work will be judged by long-term results and not only by inflation numbers this year,” he predicts. The market, however, sees plenty of room for further rate cuts.

Less than a year ago, Ebrard, a high-profile political heavyweight who served as Mexico’s secretary of foreign affairs under outgoing President Andrés Manuel López Obrador (AMLO), was threatening to Sheinbaum’s and López Obrador’s Morena party to run for the presidency on his own. He had previously lost the 2012 race for the Moreno nomination to AMLO himself.

But after the landslide victory that will make Sheinbaum the first woman and first Jewish person to govern Mexico in its 200-year history, Ebrard took a step back and joined the governmental team.

The markets saw the choice as positive, given that Ebrard has a more moderate profile compared to Claudia Sheinbaum’s more left-wing stance. Since the new minister’s nomination, the Mexican peso has gained significant ground against most G7 currencies; Mexican stocks have also trended upward.

Among his duties, Ebrard will oversee the 2026 review of the United States-Mexico-Canada Agreement (USMCA), a pivotal moment that could shape Mexico’s economy over the next decade.

“There is a kind of protectionist consensus in the US,” he said in his first interview in his new post. “That’s why the review of the trade agreement with the US, and the trade relationship with [the US and Canada] in general, could be more complex.”

Ebrard will also need to manage China’s growing interest in Mexico, says Eduardo Ordóñez, an independent political and security risk analyst based in Mexico City.

“China is gradually investing in northern Mexico,” he notes, “diversifying its supply chains and trade routes along the border with the US. Keeping foreign direct investment growth, while maintaining a positive and cooperative relationship with the US and Canada will be the challenge.” Experts also expect nearshoring to be the key concern for Ebrard and Sheinbaum. To support growth in that area, Ordóñez says, he will need to “bolster investment to modernize infrastructure in ports, land transport, as well as help cargo carriers modernize their fleets.”

With a total green bond issuance worth $131.3 billion (about ¥0.94 trillion) in both domestic and international markets, the country nearly doubled the second place, Germany, which issued roughly $67.5 billion during the year.

The milestone comes as the market recovered from a sharp drop in 2022 due to increasing interest rates around the world. According to data from S&P Global, total green bond issuances were up 10% year-over-year in 2023, totaling $575 billion, largely pushed by a rebound in Europe.

China saw a 3.5% YoY drop in volume compared to 2022. But the slump wasn’t nearly enough to counter the country’s massive leadership.

The US, first place in the global green bond market until 2021, now ranks third in the global ranking with a total of $58.3 billion issuance in the full year 2023, according to Climate Bonds Initiative data.

The UK, the fastest-growing country in the space, leapfrogged from seventh to fourth place in the year, issuing $32.6 billion in green bonds that adhered to CBI criteria.

2024 year-to-date numbers warn, however, that keeping the leadership could be more challenging than it seems for China this year. According to data from S&P Global, Q1 green bond sales in the country have slumped a massive 46%.

Nonetheless, experts say there’s a lot of untapped potential in the country, if only there were buying interest. “The issuance of green municipal bonds as a green financing mechanism is not being proactively pursued due to a lack of awareness and capacity to expand financial resources and instruments,” explains Liu Wenjie, senior analyst at Greenpeace in East Asia. Meanwhile, expectations are that the global green bond market will post solid YoY growth in 2024 on the back of subsiding interest rates. While record numbers are not expected until 2025, S&P Global sees green, social, sustainability, and sustainability-linked bonds accounting for 14% of the total debt issued in the year.  

After years of rising debt, the country has now posted four consecutive months of fiscal surplus, the first in 16 years. It now eyes a full year of positive balances. The country also posted a positive financial surplus, including interest payments, in April. Against a current 40% interest rate, the figure reached 17.4 billion pesos ($19.6 million).

The International Monetary Fund (IMF) has lauded the government’s economic blueprint, with its combination of austerity policies and lowering interest rates. It describes the current results as the first fruits of “an ambitious stabilization plan, anchored on a large upfront fiscal consolidation, along with actions to rebuild reserves, correct relative price misalignments, strengthen the central bank’s balance sheet, and create a simpler, rules-based, and market-oriented economy.”

In Argentina’s case, lowering interest rates appears to have helped dampen consumer price rises. That’s because the main driver of currency devaluation was the country’s ballooning debt, accentuated by a 50% interest rate benchmark.

Recognizing the country’s improved outlook, the IMF has agreed to release the next tranche of loans under a bailout program with Argentina. The payout, scheduled for release later this month, stands at roughly $800 million.

The “consensus is the government will achieve a full year of financial surplus in 2024, or, failing that, a primary surplus,” says Ricardo Amarilla, economist at TC Economatica. He cautions, however, that more than 60% of Argentina’s expenses usually hit in the second half of the year, meaning the government will probably need to double down on austerity and inflation reduction to keep the plan moving. “Among the main challenges are stopping the use of inflation as a mechanism to adjust public spending,” Amarilla says, “and also achieving political agreements that result in laws with genuine spending cuts.”

Central American economies have flourished in the pandemic’s aftermath due to the region’s lower-than-average inflation, allowing central banks to impose more-accommodative policies than larger economies worldwide.

However, the region received a further boost in 2023 owing to record-breaking remittances and an improving labor market, buoyed mainly by the near-shoring boom, thriving tourism and continued profitability across the commodity spectrum. As a result, Central America’s combined GDP is estimated to have grown 3.5% year-over-year (YoY) in 2023, significantly above the global average of 3.1%, according to the UN Economic Commission for Latin America and the Caribbean (Eclac).

Panama stood out as the primary winner among the region’s leaders, boasting impressive 6.1% GDP growth last year. Costa Rica followed with 4.9% growth, according to Eclac estimates.

In the banking sector, continued efforts toward further digitalization—one area in which the region still lags—and commercial loan portfolio growth were the main drivers of profitability among the more prominent players.

With a strong presence in Panama and Costa Rica, BAC Credomatic is our Best Bank in Central America for the fourth year in a row and in its home country of Costa Rica for the sixth year running.

The bank rode macroeconomic tailwinds to deepen its leadership and post significant growth in all its operation. It posted solid 27.2% YoY net profit growth for its regional operation, driven mainly by increasing loan profitability and investment-bankings trength in Costa Rica and Panama.

These figures were boosted by BAC’s focus on small and midsize enterprises (SMEs), where the bank notched impressive 22% growth last year. Increased digital banking integration drove these remarkable numbers, which jumped 50% that year. BAC’s personal banking sector also grew, to 4.7 million customers at the end of 2023.

The numbers received a significant push from the bank’s money-transfer app, Kash, which helped propel a 340% jump in new digital accounts. This was driven mainly by increased activity in BAC’s home country, Costa Rica, where the bank tested pioneering features such as Apple Pay and the integration of artificial intelligence into its financial services.

Improving digital integration and growth on the SME-loan front was also the secret behind a fantastic year for the Best Bank in Guatemala, Banco Industrial. Amid high political challenges, the bank increased its market share in the country to 29.2% in total assets, 29.1% in total net loans, 27.6% in total deposits, 23.6% in shareholder equity, and 28.4% in net income.

Amid the tightly disputed Salvadoran market, the 2024 winner, Banco Cuscatlán, focused its growth operation on corporate and mortgage loans, where it posted the highest growth rate in the country over the past three years.

In Belize, the winner, Belize Bank, grew its investment and loan portfolio to maintain its position as the country’s largest bank in assets and profitability. It held a commanding 1.9 billion Belizean dollars (approximately $939 million) in assets as of July 2023, according to the Central Bank of Belize.

By leveraging its position as the leading bank in Honduras in terms of assets and profitability, Banco Ficohsa was able to grow its asset base by 13.5% YoY, the best in the nation.

The secret behind Ficohsa’s above-average performance is continued investment in its digital offerings. Moreover, by partnering with more than 30 remittance companies, Ficohsa took advantage of booming remittances.

In Nicaragua, Banco LAFISE Bancentro met and surpassed several key milestones, demonstrating continued growth and resilience. Among the bank’s main achievements has been a double-digit growth rate (14.4%) in its loan portfolio, significantly surpassing the estimated real GDP growth rate for 2023. These numbers were mainly buoyed by the bank’s above-average penetration into its country’s SME sector, which makes up nearly 70% of LAFISE’s loan portfolio.

Finally, Banco General returned as the Best Bank of Panama after an absence riding high on its digital offerings and expanded client base.