Bank of America Merrill Lynch sees revenues up 40-50% in Latin America in 2010

Thursday, January 28, 2010

After making big strides last year in solidifying and integrating the businesses and cultures of the two banks, Bank of America Merrill Lynch (NYSE: BAC) is now looking to selectively grow in Latin America, James Quigley, the bank's president for Latin America and Canada told BNamericas.

"2009 was a very successful year for us in Latin America. We had a record year in Mexico, Colombia and Chile and we're very confident we can generate performance this year that is effectively up 40-50% over 2009, which would be the best year for us in the region."

The bank received a healthy percentage year-over-year increase in capital limits for Latin America that will give the new entity much more ability to operate in the region, to which it is completely committed, Quigley said.

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"With all the capabilities that the combination of Bank of America and Merrill Lynch brings to the table, you arrive at revenue and margin growth numbers that clearly exceed the original estimate of just Merrill Lynch doubling revenues from Latin America by 2011."

Bank of America Merrill Lynch has a fundamentally positive view on Latin America but it does not pursue a strategy in the region that is Brazil-centric, he said.

"The main driver of our overall strategy in Latin America can be summed up in one word: diversification. As opposed to front end loading all of our financial and head count initiatives in Brazil, we're looking at marginal or incremental growth in Mexico, Chile, Colombia and a few other places."

The bank has also identified about 80 companies across the region - predominantly in Brazil, Mexico and Chile - that it is comfortable lending to, "so we are expanding the corporate banking footprint across the space that allows us to mobilize the balance sheet efficiently to lend in a very targeted way. We also see opportunities in Peru, Colombia and some in Central America."


Quigley also said the key hires that Bank of America Merrill Lynch has to make over the next month or so will be primarily in wholesale corporate banking.

"We have a very well defined corporate presence in Mexico, which was the only country in the region where Bank of America had a lending platform in place. We're looking to replicate that in Brazil, Peru, Colombia, Chile and Miami. That will allow for us to allocate the balance sheet where appropriate."

The bank is also growing its cash management, treasury services, fixed income, leasing and finance businesses aggressively in all the countries it operates in Latin America, he said.

"We feel very confident we can leverage our number one positions in global debt underwriting and global high yield leverage finance underwriting into a broader footprint in Latin America. I think we have room for improvement in the commodity business, so that will be an area that we'll continue to focus on building up."

The bank also plans to expand its wealth management platform across the region. Quigley assigns this area a "high degree of criticality to the overall business."

Back in 2008, Merrill Lynch purchased Santiago-based brokerage Ureta y Bianchi, the last buy the now merged bank has carried out in Latin America and the only acquisition ever done during former Merrill Lynch CEO John Thain's tenure.

"I've always viewed Santiago as an emerging regional financial hub. It's not an inexpensive place, there are clearly more cost-efficient places to domicile oneself in Latin America, but there's a lot to be said for Chile, the quality of the country, the infrastructure, the financial system and stability."

Bank of America Merrill Lynch has on-shore presence in 8 countries in Latin America: Brazil, Mexico, Chile, Argentina, Uruguay, Panama, Colombia and Costa Rica.