Giuliana Napolitano
São Paulo – The first, and only, Arab bank in Brazil has completed 14 years in operation. ABC Brasil, controlled by Arab Banking Corporation (ABC), was established in 1989, in partnership with Globo group, then mainly operating in the editorial sector. "At that time, foreigners could not be the owners of banks in Brazil," recalls Alfredo Moraes, vice-president of ABC Brasil. The way out, therefore, was association with local companies.
In 1997, however, when Globo decided to focus mainly on the Brazilian media sector and Brazilian opening to foreign investors was at full throttle, ABC international purchased share control of the Brazilian subsidiary. Nowadays the institution holds 84% pf ABC Brasil shares. The remains, according to Moraes, belong to bank executives.
From 1989 to date, institution equity has had a sixfold increased: rising from US$ 20 million when operations began to US$ 120 million this year. Assets have risen even more, from US$ 100 million to around US$ 1 billion in the period, informed ABC Brasil vice-president Moraes. The bank is currently in position 41 among the 164 institutions registered in the country, according to Brazilian Federation of Bank Associations (Febraban) ranking.
Brazil now represents around 10% of ABC assets worldwide. "Individually we are big," states the executive. He says this because Brazil has a participation similar to that of the United States and Canada (15%) and Asia (17%). Almost 60% of bank assets are in the Arab world and in Europe.
Creditor
Alfredo Moraes recalls that the bank has already lived a variety of different moments in Brazil. When the bank started operating on the local market, the country had recently declared moratorium. "And ABC was a Brazilian government creditor," says the executive. This, in reality, was one of the reasons that made the bank decide to invest in the country. "We believed that the best way to recover the funds was to invest in the country," he explained.
At the time it was also not permitted for international institutions to be major partners in banks in the country. Nowadays, foreign banks control some of the main financial institutions in the country, such as Real (ABN Amro – from Holland) and Banespa (Santander – from Spain), and some have branches operating in the country – as is the case with Citibank and BankBoston, for example.
Opening in the Middle East
Moraes compares the process that took place in the Brazilian financial system with what is currently going on in the Middle East. The countries in the region have started permitting foreign institutions to invest in national banks. For the time being, however, the opening is "relative", says the executive. "The same that happened in Brazil is going on there: you are only permitted to become associated with local banks, and the rules are strict," he analyzes.
Taking advantage of the preference they have in the Arab world, as their head office is in Bahrain, ABC has been expanding operations in the region. Recently, he says, the bank increased participation in Egypt, Algeria, and Tunisia.
The main difference between Arab bank operation and operation of banks in other countries is Islamic law, which does not permit interest charges, common elsewhere. In the Islamic world, ABC operates according to Islamic law, but at present does not intend to create a similar service in Brazil. "The demand is too small," justifies Moraes, recalling that in the US, where there are Islamic financial products, "market density is much larger."
Foreign trade
ABC Brasil – which has branches in the southeastern cities of São Paulo, Campinas and Rio de Janeiro – intends to continue operating as it has been over the next few years: focusing on credit operations, underwriting and investing, even in foreign currencies.
The bank is also betting on an increase of Brazilian export to the Arab countries. In an interview to ANBA in September, the ABC Brasil vice-president for international stock markets, Anis Chacour, stated that ABC estimates that there will be 15% trade growth. For the bank, that means more business as this year one third of the banks assets are being used to finance import and export operations.
Contact
Banco ABC Brasil
Av. Paulista, 37 – 15º andar – São Paulo (SP)
Phone: (+5511) 3170-2136 / 3170-2314
www.abcbrasil.com.br
