São Paulo – Currently, with at least two Arab banks operating in Brazil, namely ABC Brazil, from Bahrain, and the National Bank of Abu Dhabi, from the Emirates, Brazil still offers enough space in the market for entry of financial institutions from the Middle East, especially if they focus on specific niches, not retail, where competition is not as fierce. This is the evaluation of Deborah Vieitas, new president of the Brazilian Association of International Banks (ABBI), who gave an exclusive interview to ANBA.
"I think that in Brazil, the key to success is knowing clearly what your competitive advantages are, i.e., what niches you would have few competitors in, as they are your specialty, and coming here to explore those market niches," said the executive, noting that the major international retail banks in Brazil, such as Santander and HSBC, work with a network of over a thousand branches.
Vieitas, who is also the chairman of Banco Caixa Geral Brazil, controlled by Caixa Geral de Depósitos, of Portugal, was elected to head the ABBI on June 17. The association, established in 1989, has 92 members, including banks, representative offices and other organisations. Anis Chacur Neto, from Bank ABC Brazil, was elected executive vice president alongside Vieitas. The term for this administration is the two-year period from 2013 to 2015.
To the executive, one of the major roles played by foreign banks in the country is to finance large projects. "Foreign banks have always brought a significant amount of capital to Brazil to finance the economy and offer medium- and long-term maturities. This is something that Brazil still greatly needs: medium- and long-term resources to finance investments. And foreign banks have always contributed much to that," she pointed out.
According to her, Arab investment in Brazil was more intense in the 70s due to high oil prices in the period. This capital, she explains, was mainly used to finance exports and imports between the two regions. "Relations between the Arab banking-financial community and Brazil are longstanding. Of course it lives moments of greater development and changes over time, but relations are quite old and ever present," said Vieitas.
"The (recent) arrival of the National Bank of Abu Dhabi is a good example of how banks in the Middle East understand that Brazil is a country that offers important business opportunities and how Brazil-Middle East relations are not only present in the foreign trade area. We also have the presence of Middle East capital coming to Brazil with investors. Several sovereign funds are looking at investment in Brazil in several sectors," she added.
According to Vieitas, the low economic growth presented by Europe is causing the Middle Eastern countries to start looking in other directions in search of investment opportunities, and Brazil, as an emerging country, is one of the focuses of these institutions.
"The great facilitator is that Brazil has great integration with different communities in the Middle East. In our population, we have a large presence of the Syrian-Lebanese community, and they have made a strong mark on our culture. These ties are important facilitators. Banks from the Middle East know that when they come to Brazil they have the support of the Arab Brazilian Chamber of Commerce, and of other players in the financial system. I believe that, despite the cultural differences, there are strong and ancient ties that can make the transition here comfortable and very interesting, due to the many investment opportunities in Brazil. I believe that the reasons to come here are many," she pointed out.
To Vieitas, Brazil can also develop in areas of interest to banks from the Middle East, becoming more attractive to these institutions. "Brazil, for example, is one of the countries in which Islamic financing is not much present. Therefore, if the country can adapt to the conditions necessary for Islamic financing, it can probably attract a significant amount of capital from the Middle East, which is not here yet," she pointed out.
The ABBI president believes that banks from the Middle East that already work here may attract more capital from the region to the country." I understand that the role of banks in the Middle East is also to facilitate the attraction of funds to Brazil and to make a bridge between the Middle East and the country, linking the investment needs available here and the capital available there for investment," she added.
Today, international banks operating in Brazil represent about 20% of the total assets of the Brazilian financial system. According to data released by the Central Bank in May, they add up to R$ 6.1 billion (US$ 2.7 billion).Most foreign banks operating in Brazil are institutions from Europe and the United States.
*Translated by Mark Ament
