Bapro to step up focus on commission revenue

Bnamericas Published: Wednesday, April 14, 2004
Buenos Aires province bank Banco Provincia (Bapro) will place a strong focus on commission-based banking products and services this year to diversify its revenue stream, a Bapro source told BNamericas. Argentina's severe economic and financial crisis in late 2001 and 2002 forced the country's banks to turn to commission-based banking as the loan market and interest income collapsed. This year, lending is set to make a comeback in Argentina thanks to a better performing economy and political stability, but Bapro's commercial strategy in 2004 will be oriented towards boosting commission-based income further, the source said. The bank will push for commission generating products and services such as credit cards, debit cards, checking accounts, and savings accounts and insurance, he said. In the case of insurance, several of Argentina's largest banks are today marketing their insurance product-line very aggressively and have come to represent fierce competition for local insurance companies. Before the crisis, insurance was a low-priority business for most banks in Argentina. At the end of February, the federal government invited local and international consulting firms to bid for contracts to evaluate the financial state and performance of federal bank Banco Nación and Bapro. Argentina's economy ministry said this Wednesday bids had to be in by April 26. Although Bapro is "open to all recommendations on how to improve its performance" the bank already has a business plan in place and its status as an autonomous provincial entity gives it the luxury of being able to ignore recommendations from the federal government, the source said. The external evaluation's objective is to recommend measures to strengthen and improve efficiency at Nación and Bapro, which have traditionally suffered high bad-loan levels and have been behind their private peers in technology investments. Bapro is Argentina's second largest bank - after Nación - in terms of overall market share.

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