Brazil’s Itaú Unibanco to launch Argentina brokerage

Itaú Unibanco saddles up for a new venture

Brazilian bank Itaú Unibanco has announced it is to open a brokerage operation in the Argentina, after 23 years of operating in the country.

Despite Argentina’s recession and IMF bailout, the bank – normally a shrewd judge of Latin American wealth flows – thinks now is the time to invest in a platform to offer brokerage services to its private banking and institutional investor client list.

The operation will be headed by Ricardo Cavanagh, CEO of Itaú Valores, and marks a sizeable extension of its banking network in the country.

Cavanagh told Brazilian newspaper Valor that the decision reflects the potential for AUM growth in the domestic economy; after the 2016 tax amnesty, there is an estimated $400 billion declared offshore in Argentine wealth that could flow back to the country if – and when – growth returns.

Much more important than the group of world leaders visiting Argentina for the G20 is the prospect that locals could soon bring their offshore cash back home to stay 

That compares with the local stock market’s total capitalization of $47.3 billion.

Itaú projects a 2.2% contraction in the Argentine economy this year and zero growth next year, but is clearly banking on the mid-term revival in the country’s fortunes.

Itaú isn’t alone – fellow Brazilian bank BTG Pactual has also entered the Argentine private wealth market.

A new capital-markets law has been delayed – understandably, the government has had other pressing issues – but is expected to be a priority in 2019 to push through financial-market deepening, and the potential for economic and financial growth is clear.

Much more important than the group of world leaders visiting Argentina for the G20 is the prospect that locals could soon bring their offshore cash back home to stay.