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AmericasJanuary 5 2004

Brazilians set up base in China as exports boom

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Brazilian banks are leaping onto the bandwagon of soaring Brazilian exports to China – up 90% to $3.4bn in the first nine months of 2003,compared with the previous year – by opening offices in Shanghai.

Banco do Brazil, Latin America’s largest commercial bank, is opening an office there, as is small Banco Santos, a Săo Paolo-based bank with assets of $1.76bn. The bank, which has 10 branches in Brazil, insists it can compete with giants such as HSBC, which recently got approval to expand its Renminbi business in China and has about 1,500 branches in Brazil.

“We have successfully competed with the big banks in Brazil since Banco Santos was founded in 1994,” said Banco Santos president Edemar Cid Ferreira. “We have done it though investing in technology and the best talent in banking.”

Banco Santos’ record in re-lending financing from BNDES (the large state-controlled development bank, which makes subsidised loans to Brazilian companies) gives it an advantage in its Shanghai office, which will break even in three years, Dr Ferreira said. “We are the fifth-largest agent bank for BNDES.”

Banco Santos’ balance sheet shows soaring provisions for bad loans for the first half of 2003, jumping more than six-fold to R63m ($21.5m) compared with the previous year. The bank decided to be “conservative and raise the provisions in view of the long period of economic stagnation,” said Mario Martinelli, a bank managing director.

Brazil’s economy was expected to grow less than 0.3% in 2003 and about 3.5% in 2004.

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Read more about:  Analysis & opinion , Americas , Brazil