Overall, the market has passed through a strong consolidation process. With the exception of Spanish banks, global players have reduced market share in most countries; however, regional banks continue to be attractive targets in the region. In keeping with worldwide trends, valuations have dropped by half, but multiples remain higher than Europe and the US, as LATAM banks remain highly profitable. Regional banks are also expanding their footprint non-organically, further strengthening cross-LATAM deal activity in the region.
Banks in LATAM are picking up the pace in moving to digital. Many players are acquiring or partnering with fintech companies, primarily to build out capabilities in payment processing, front-end customer acquisition and mobile wallet. As banks’ growth agenda is driven by digital transformation and innovation in response to client demands, we expect a continuous wave of deals with regional fintech players. Additionally, neobanks are gaining attention as potential solutions to large-scale financial exclusion across LATAM.
The deregulation of the financial market by the central bank should provide opportunities in payment processing and non‑regulated finance, incentivizing the entry of new players and increasing competition. Argentinian banking M&A is expected to be largely driven by fintech and changes in the payment processing market.
"While global players have significantly reduced their presence in the Region, local domestic giants are not only expanding their territories, but also winning the race for innovation and excellence." - Fernando Mattar, Partner, Deal Advisory Financial Services, in Brazil