Saturday, March 21, 2009

Investing in Sound Banks

For investors interested in financials and taking advantage of the upcoming plunge of the USD, The Economist has this to say today about Brazilian banks:

"Brazil’s banks may be expensive, but at least they are safe. None has yet been troubled by the world financial turmoil. That may be because their profits from everyday banking were so high that they had no need to take silly risks. It is also because bank regulation was tightened after several went bust when inflation was tamed in the mid-1990s.
As evidence that the market is open, bankers point to Spain’s Santander, which has a reputation for competing aggressively on consumer loans and mortgages and which is now Brazil’s third-biggest private bank. But Santander’s Brazilian operations are half as profitable again as its worldwide average. HSBC and Citibank have small operations in Brazil, which are doing nicely. One way or another, Brazilian banking seems likely to remain a profitable exception to the disasters elsewhere."

Brazilian ADRs in New York: :
The Economist article:

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