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Banespa launches VGBL pension plan to pull in US$100mn

Bnamericas Published: Tuesday, June 03, 2003
Brazilian bank Santander Banespa, the local unit of Spanish bank SCH, has launched its VGBL pension plan, aiming to pull in 300mn reais (US$101mn) in contributions this year, the bank said in a statement. "We inherited a very loyal clientele from Banespa. We have enormous potential for growth through our banking channel," Santander Banespa's chief executive for pensions Rodrigo Wuerkert told BNamericas. Insurance regulator Susep authorized VGBL pension plans a year ago. They are similar to 401K in the US and also bring life coverage. VGBL and the four-year-old PGBL plans are the two most popular products in Brazil's pension industry. Last year the pension arms of Brazil's two largest private banks Bradesco and Itau cornered more than 90% of this market, as they where the first to launch the plans, aggressively tapping into their banking channels to sell them. "You might say we are doing a late launch, but Banespa didn't have pension products when Santander bought it. In addition to structure the pension unit from scratch, we had to develop an IT platform for it," Wuerkert said. Santander launched its PGBL plan in December 2001 and held 4.7% of the market by end-2002. The bank's stake in the market subsequently rose to 5.3% by the end of March this year. "In the month of December, for every 100 reais of PGBL contributions in the industry, 12 reais were for Santander Banespa," Wuerkert added. Santander Banespa currently manages 590mn reais in pension assets, of which 484mn reais are in PGBL plans. The bank plans to close the year with about 700mn reais in PGBL assets and 300mn reais in VGBL assets, a total of more than 1bn reais when including assets in other plans the bank no longer sells. Santander Banespa plans to corner 4% of the VGBL market by year-end and 6.5-7% of the PGBL market. "We [SCH] have 15% of the pension market in Latin America. Banespa has 153 years in Brazil and is one of the country's most profitable banks. This is the kind of security people are looking for when they buy pension products," Wuerkert went on to say. Banespa Santander said earlier this year it would invest 750mn reais in technology by year-end. The launch of its VGBL plan follows hard on the heels of implementation of a new platform for the bank's pension unit that is now integrated to SCH's global platform Altair, Wuerkert said. SCH bought former Sao Paulo state bank Banespa for 7bn reais in November 2000. In the following two years, SCH restructured Banespa and grouped its Brazilian assets under the Santander Banespa umbrella. Last year Santander Banespa was Brazil's most profitable bank with ROE of about 65% and net income of 2.81bn reais. For the first quarter it posted net income of 830mn reais, up 58% the same period last year.

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