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Reuters Summit-Wealthy LatAm clients still prefer offshore

Published 10/06/2010, 11:11 AM
Updated 10/06/2010, 11:12 AM

* LatAm wealthy still seek political, regulatory stability

* Onshore private banking will grow as expertise develops

* Mexico money turning away from onshore management

By Judy MacInnes

GENEVA, Oct 6 (Reuters) - The wealthy of Latin America continue to bank abroad for the stability and security that offshore financial centres can offer, despite growth opportunities at home.

"Latin American investors look for a consistent regulatory environment when they invest," Alberto Valenzuela, deputy chief executive of Societe Generale Private Banking (Suisse), told the Reuters Global Private Banking Summit.

In the wake of the global financial crisis, markets have been concerned about scrutiny of offshore private banks, so Switzerland's move to introduce new transparency rules has been welcomed by investors.

"For Latin American clients there is no place better (than Switzerland)," said Valenzuela, who caters for Latin American clients who bank in Switzerland.

Spain's biggest bank Santander is one of the top three banks in Latin America and has very profitable commercial banking operations there, particularly in Brazil, Mexico and Chile, where it has also recently been investing more in private banking.

But political stability remains a key issue for wealthy Latin Americans.

Assets managed by Santander Private Banking on behalf of Latin American clients total 62 billion euros ($86 billion) worldwide.

"Our clients in Brazil and Mexico, for example, have very good existing relationships with their local branches, and we also have clients who bank through Miami," said Antonio Costa, General Manager of Banco Santander Suisse in Geneva.

"But they have political and financial stability in Switzerland," Costa said.

Swiss asset managers' expertise and service are also key criteria for the rich, whose principal goal is to at least preserve their capital base, and this has led more investors to choose the offshore banking model, a top HSBC private banker told the Reuters Global Private Banking Summit in Geneva.

But on-shore banking is expected to become more attractive with time.

"We are seeing some more onshore activity in Latin America, however ... and as onshore banking develops and expertise improves, this option will become more attractive. There will be more of a level playing field," HSBC Private Bank Chief Financial Officer Leigh Robertson said.

BRAZIL ONSHORE, MEXICO OFFSHORE

Brazil is still widely seen as the country with most growth potential in Latin America because of its vast natural resources and capacity for exports to meet growing demand from countries such as China.

Top international banks such as Credit Suisse are eyeing developing onshore private banking operations there.

"We want to build a domestic Brazilian private bank, which we are in the process of doing ... I think the Brazilian government welcomes bringing in the sort of expertise Credit Suisse can bring," said Anthony DeChellis, CEO of Credit Suisse Private Bank (Americas).

Mexico is also seen as a star economy in 2011 and is strategic for both Societe Generale and Spain's BBVA.

But the more politically and physically risky environment in Mexico is driving the rich to look for alternatives abroad.

"In Mexico, with the current environment, I think people probably tend to look more outside now than they were a couple of years ago. They were starting to look internally, but the tide has changed now, and people with more put money outside of Mexico," de Chellis said. (Additional reporting by Joe Giannone; Editing by Will Waterman) ($1=.7219 Euro)

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