Tuesday, November 24

A bench overlooking the Casa Rosada | Economy



In corners of the deep interior of Argentina, such as the tourist town of Tilcara, in the northern Quebrada de Humahuaca (Jujuy), the only bank that has a branch there is Macro. The largest private financial institution with national capital in the South American country began to take off in the mid-1990s thanks to its commitment to “the interior” (or the provinces) and the middle and lower segments of the population, until then neglected by the most private companies. That presence throughout the country seems to have inspired his slogan: “Your bank close, always.” But in Argentina many believe that the phrase is also directed at the political power in power.

According to WikiLeaks leaks published by the Argentine newspaper La Nación in 2011, US diplomats in Buenos Aires mentioned that the president of Macro bank and one of its main shareholders (20%), Jorge Brito, was considered “Kirchner’s banker” and one of the important advisers of the ex-tenant of the Casa Rosada in financial matters. For this, key was his role for 13 years as president of the association of banks with Argentine capital (Adeba). Under his mandate, the union, and mainly Macro, provided the first loan that the Government of Néstor Kirchner agreed to after the suspension of payments and the economic collapse of Argentina in 2001, of 167 million dollars.

Macro’s take-off began a few years earlier with the privatizations of provincial banks during the 1990s. The bank founded by Brito and his brother-in-law Ezequiel Carballo, who add up to almost 40% of the shares and thus have control, was in 1995 nothing more than a wholesale entity with a single house in Buenos Aires. Two decades later, it has become the Argentine private bank with the largest branch network in the country.

In his office, located in a simple building in the center of Buenos Aires, Brito says that with his brother-in-law they started as Stockbrokers in 1978. “In 1985 we bought Macro Compañía Financiera and in 1988 the Central Bank granted us authorization to function as a bank,” he explains. In the beginning, customers were just companies. “The most cowardly capital is that of large investors, that is why with the Mexican crisis [1995] We lost 82% of our deposits and we realized that, in order to rebuild the business so that the same thing would not happen to us again, the only alternative was to partner with a large international bank ”. The path they chose was another. “We became a retail entity and with a different strategy than the one that banks in Argentina had until that moment. We put all the interest in the interior of the country and in the attention to clients of medium and low sectors, and to SMEs ”, says Brito.

Key facts

  • In 2006, the Macro began trading on the NYSE. In the Buenos Aires Stock Exchange it had been doing so since 1994.
  • It is the collaborating entity of the national State in four provinces: Salta, Misiones, Jujuy and Tucumán.
  • It has 438 branches throughout the country. More than three million retail clients and 79,355 corporate clients.
  • As of June 2016, 39% of the share capital belongs to the majority shareholders (the Brito and Carballo families), 30% is listed on the Buenos Aires Stock Exchange and on Wall Street and 31% is in the hands of Anses (the entity Social Security).

Expansion time

The president of Macro explains that around 1995 the provincial banks were almost bankrupt and this facilitated the purchase of many entities. In 1996 they acquired the Banco de Salta, the Banco de Misiones and the Banco del Noroeste. Two years later they were left with Banco de Jujuy, and in 1999, with branches of another four: Mayo, Almafuerte, Mendoza and Israelita. After the financial crisis of 2001, between 2002 and 2010 they added Bansud, 35% of Scotiabank Argentina, Nuevo Banco Suquía, Banco Empresarial de Tucumán, Nuevo Banco Bisel, Banco de Tucumán and Banco Privado de Inversiones. Today the entity has 438 branches, 79% of them in the interior, and more than 8,700 employees.

In Argentina the view is widespread that the last decade has been very profitable for banks. The president of Macro, however, assures that the financial sector has been “the most affected by inflation” that characterized those years. Brito affirms that analysts “do not know how to differentiate” that the assets of non-financial companies are revalued even though there is inflation, while money, which is what banks have, is not revalued. “If the projected profitability of the Macro is around 40% and inflation is also 40%, how much did the bank earn? Zero, ”he says. The bank itself, at the same time, reports that it is the only Argentine entity that can present 58 consecutive quarters (more than 14 years) of earnings. The Macro Group ended 2015 with a result of some 589 million dollars at the exchange rate of that time, 44% higher than the previous year.

Guido Sandleris, professor at the Universidad Torcuato Di Tella in Buenos Aires and former at the London School of Economics, explains that, with high inflation rates, the business of banks goes more to capture the greater amount of deposits that pay interest rates very low (such as checking accounts and savings accounts) and granting short-term loans with high interest rates.

Being the financial entity of the State in the provinces of Salta, Misiones, Jujuy and Tucumán is a good business for Macro. The bank receives billions of pesos from the provincial budgets and captures the massive bank accounts in which state employees collect their salaries. To this are added the commissions it charges for the bond placements of the provincial states.

At the same time, the bank chaired by Brito has been one of the largest recipients of funds from the National State. When the Government of Cristina Kirchner nationalized the private retirement and pension funds (AFJP), the state entity that manages Social Security benefits (Anses) not only became one of the main shareholders of the Macro (more than 30%) . Furthermore, in the years that followed, Anses became an increasingly important client, since it deposited more funds in the Macro than even in the state-owned Banco Nación.

In 2014, Macro led an attempt by Argentine banks to resolve the government’s dispute with debt holders that had not accepted the 2005 and 2010 restructurings. But the relationship with the government was no longer so good. Brito affirms that the Government of Cristina Kirchner “would have done better” if it had supported her attempt to solve the problem. “It could have been arranged at that time. But within a policy in which the country was heading to be Venezuela, not fixing was a political flag. But my business is not politics, “he says.

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