Disparate payment and clearing systems across Latin America present challenges for corporate treasurers. But the race is on to build new market infrastructures that support the transition to faster payments.
Best Overall Bank for Cash Management
BBVA has an on-the-ground presence in the major markets of South and Central America. Its BBVA Cash is a highly customizable multicountry, multibank digital banking solution. The NetCash app, a former honoree in Global Finance’s Innovators program, allows corporate treasurers and staff to handle a surprising array of functions via their mobile devices. These include viewing account positions, accessing latest transactions and the associated documents, handling transfers, managing cards, along with market-leading functionality such as generating codes needed for signing transactions and managing and advancing invoices for trade financing products, of which reverse factoring is one example.
The BBVA group reported income before tax of €5.1 billion in the first 9 months of 2016, and operations in Mexico and South America accounted for 57.7% of group income over the same period. The bank has a CET1 capital adequacy ratio of 12.3%
Best Bank for Liquidity Management
One of the key differentiators for Citi in Latin America is that it has created market-specific liquidity management solutions for the countries in which it operates. For example, “Citi offers a Multi-Bank-Target-Balance solution in Brazil and Peru that allows customers to manage cash across all the banks and concentrate flows with Citi for efficient cash management,” notes the bank. It has the Citi Interest Optimization solution for countries including Argentina, Brazil, Costa Rica, Peru, Panama and Guatemala. Citi’s Global Concentration Engine solution is available in Puerto Rico, letting clients perform cross-border pooling beyond local clearing cut off times, using a target balance design. Users can also apply arm’s length pricing and thin capitalization policy to satisfy different tax jurisdictions. In Brazil, the bank launched FCA, an automated platform for short-term investments, allowing clients “to invest cash in short-term investments and redeem it in real-time only if there is a commercial payment exceeding available cash.” The bank has a CET1 ratio of 12.5% and reported income of $3.6 billion for 2016.
Best Bank for Payments and Collections
BBVA offers a range of payments and collections services for markets in the region to provide a clear view of cash and transaction details and. Its multibank, multicurrency digital banking solution provides a single position for the region. It has an electronic collections solution that offers access to collection details in each country, e-collections, a vault service, and e-invoicing and remote deposit. On the domestic payments front, it supports digital payments and tax payments, multicurrency digital transfers and check outsourcing.
The bank’s Net Cash app has twice been an award winner in Global Finance’s annual Digital Bank Awards. BBVA recently bought Mexican firm OpenPay, which facilitates digital commerce and payments for companies in the Mexican market. The bank is a leader in technology innovation, and was an early leader in launching an innovation competition and mentoring program, Open Innovation and Open Talent, with its latest round of the former focused on “alternative banking business models.” The Open Talent program was launched in 2009 and last year boasted 1,200 entries from 77 countries.
Best Provider of Short-Term Investments/ Money Market Funds
The bank offers tailored short-term investment solutions for different markets in Latin America. In Argentina, for example, in addition to term deposits denominated in ARS and US dollar, it also offers an open-ended money market mutual fund in ARS, along with dollar-denominated sovereign bonds. In Brazil, in addition to automatic sweeps and term deposits, the bank provide clients with repos denominated in BRL that are yield-advantaged vs. traditional MMFs. And in Chile, the bank offers repos, terms deposits and open-ended investment funds, all denominated in CLP, USD or EUR. More broadly, the bank’s asset management arm, Santander Asset Management has €84.4 billion of asset under management in Latin America, representing 45.9% of the bank’s global AUM. The asset management arm of global bank Santander manages 23 funds across various asset classes, including multi-asset class solutions, and has viewed Latin American asset management as a key focus area for close to 20 years. It has the largest team in the region devoted to investment management, with 79 managers, analysts and economists and it is the largest international management firm in the region.
Best Bank for Working Capital Optimization
As companies in Latin America focus on creating more-efficient treasury structures and unlocking liquidity in trade flows, some international banks have concurrently been reducing their presence and footprint in the region. Citi, however, has doubled down on Latin America, providing corporate clients and their global trade partners, with a wide range of solutions to help unlock capital tied up in their working capital cycles.
Few banks have the capability to provide a holistic view and approach within the disjointed Latin American region, but Citi’s global solutions simplify and enable better working capital management. The bank offers a range of trade finance and supplier finance solutions, along with distributor finance, export-credit agency backed working capital programs. In addition, large corporates can take advantage of Citi’s Working Capital Analytics review service where the bank mines a company’s payments data to determine working capital enhancement opportunities and its procure-to-pay suite of solutions.