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Latin American banks’ road to recovery

As we are witnessing the air getting clearly surrounding the pandemic across the globe recovery steps are starting to begin. It is not wrong to say that the most hit region is Latin America without a doubt. And inspite of the difficult health situation , banking systems thrived so far. They have responded well to the crisis and its socio economic impacts. As the recovery initiatives take place , the region’s financial institutions anticipate in increasing the investment by digitalization and sustainability.

Digitalization and sustainability are the key factors which ensures the resilience and a future to the business continuation for their clients.  Latin America accounted for 21% of global Covid-19 cases, and 31% of reported deaths even though it was hit a little later compared to other regions. The economic instability was seen April 2020 onwards. The result was shocking as the region’s population makes up just 8.2% of the total global population.

The first phase of the crisis had varied yet strong responses from the Government. As they prioritized the preservation of lives and livelihoods with many countries implementing lockdowns. With plummeting trade flows and business confidence going lower, the region managed to void financial collapse and most countries retained access to Global Financial Markets. Economies such as Argentina’s and Ecuador’s were able to negotiate their debts restructurings even if they were fragile pre pandemic amidst global disruption. There was an initial scramble in the region’s financial services sector for the US dollar liquidity between the months of March and April 2020. In the month of May when governments , central banks and regulators stepped up efforts in order to provide financial markets a backstop on the US dollar , there was a considerable improvement in the regions.

The measures such as having ‘Whatever it takes’ initiatives to introduce quantitative easing type policies which allowed the banks to reschedule loans and be generous with agreement facilities , started around August last year. These helped in strengthening the economic recovery. One such good thing was the recovery of the south-south trade corridor, such as china which were the key trading partners of the corridor began to recover which helped in easing the hard and soft commodities export from Latin America. Trade volumes slowly but steadily inched back to previous levels.

With adequate solvency and liquidity ratios , the result of measure taken after the last global financial crisis most part of the region’s banking systems had got a good shape even after the virus arrived. Regulators , too have played a crucial role by introducing guarantee  schemes for credit facilities , loan moratoriums and looser loan classifications and provisioning rules, to incentivize banks to continue lending.

An estimate of around US $8 billion of yearly financing is needed until 2030 in order to combat the effects of climate change in Latin America. Financial institutions will play a large role in meeting this demand and promoting action amongst their clients.

It is expected that local currencies will regain the strength after the vaccines have arrived and the region starts its economic recovery post pandemic. The future will depend on the measures taken by the governments in the region choose to support their economies by directing public investments towards the growth and inturn help the employment ratio to grow.

The banks must remain prudent in protecting their financial strengths. The banks should begin their journey for the future of digitalization and green developments , as it with no doubts shall reap the rewards in the longer term. 

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Goldman banker hired by the Citi bank

Citigroup has hired Luisa Leyenaar-Huntingford from Goldman Sachs. This new hire is to co-head its global infrastructure franchise. Because, it seeks to win more business from cash-rich investment firms focusing on infrastructure deals. Leyenaar-Huntingford will be based in London. Responsibility will be shared with Todd Guenther in New York.

The pair will work closely with industry teams covering healthcare, industrials, natural resources and clean energy transition (NRCET), technology and communications. Leyenaar-Huntingford helped in the establishment of the Goldman’s infrastructure franchise in her time at the Wall Street bank. They will team up with Citi’s Iberia co-head of banking, capital markets and advisory (BCMA) Jorge Ramos will continue to be a senior member of the global infrastructure franchise.

The infrastructure sector is poised for further growth, according to the memo. The memo was released by Citi’s global co-heads of the alternative assets group Anthony Diamandakis and John Eydenberg, and its EMEA head of BCMA Nacho Gutierrez-Orrantia. There was significant private investment demand across the globe to deal with environmental, energy, transportation, waste, communication, digital and other social needs.

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Banks make slow progress on UK gender pay

Major banks in Britain made a slight dent in their gender pay gaps. Several insurers went backwards. Companies in Britain with more than 250 employees have been required to publish the difference between the pay and bonuses of their male and female employees. They got a reprieve due to the pandemic, last year. The financial services sector has shown one of the largest genders pay gaps in Britain. The lack of women in senior jobs is the main reason.

Pay gap data from 21 major financial institutions showed a narrowing in their average mean gender pay gap. This is just 0.4 percentage points. Banks alone had a pay gap which narrowed by one percentage point. Ann Francke, chief executive of the Chartered Management Institute said that the UK’s financial services industry has often been singled out. It really does have to get its house in order. Goldman Sachs had the widest gender pay gap in the year to April 2020. Goldman posted a gender pay gap of 51.8%. The bank told the staffs that narrowing the gap further was a critical priority. A spokesperson for banking lobby group UK Finance said, that there is clearly more still to be done.

FTSE 100 insurers Prudential, Legal & General and M&G reported a widening in their pay gaps. Prudential’s UK gender pay gap widened to 45.2%. M&G also reported a widening in its pay gap in the most recent year to 30.5%. The M&G spokesperson said that they are determined to narrow their gender pay gap and will do this by achieving better representation of women in all roles at all levels of our organization. Legal & General’s mean gender pay gap widened to 30.8%.

The insurer said that the legal & general is tackling the underlying causes of its pay gap. This is by creating a more diverse workforce and a more inclusive culture through sustained, long-term action. Admiral had a gender pay gap last year of 12.8%. The 21 firms surveyed were Barclays, HSBC, Lloyds, NatWest, Standard Chartered, Bank of America Merrill Lynch, Goldman Sachs International, JPMorgan, Morgan Stanley, UBS, Credit Suisse, Deutsche Bank, PGMS (a Phoenix unit), abrdn, Schroder Investment Management, St James’s Place, Legal & General, Prudential, Admiral Group, Aviva and M&G.

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BOJ to lower inflation target-Japan’s finance minister

Japan’s outgoing finance minister, Taro Aso, said that he had proposed lowering the central bank’s 2% inflation target. This is when the prices took a hit from plunging oil prices. He was the finance minister for nearly nine years. The slump in oil price was among the main reasons the government could not officially declare an end to deflation. In his final news conference as finance minister, Aso said that he proposed to Governor Kuroda that, with oil prices falling this much, it would be hard to achieve 2% inflation. Hence, the target must be lowered at some point. He stated this by referring to Bank of Japan (BOJ) chief Haruhiko Kuroda.

Aso also said that the governor said he would do his best to achieve the target. This is stated by adding that policymakers must scrutinise at some point, why the BOJ’s inflation target of 2% has not been met. The remarks highlight how the government and lawmakers distanced themselves from the BOJ’s target years ago, despite central bank reassurances that achieving the target was possible by maintaining or increasing stimulus.

Aso was deeply involved in negotiations with the BOJ. After Kuroda took over as governor, he deployed a massive asset-buying program. This is for pulling Japan out of deflation. Aso supported the BOJ’s stimulus efforts. He is a member of the cabinet. And also, had raised many doubts that monetary policy alone can reflate the economy out of the doldrums. New Prime Minister Fumio Kishida is set to form a cabinet.

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