In the past, a global financial crisis that involved Latin America and banking titans of the United States and Europe historically would demand an international response to a tempest in the southern hemisphere.
But the financial crisis that began in 2008 turned that model on its head. Wall Street has not solved this crisis; it created it.
And Latin America and its leading banks, far from being Ground Zero of the financial crisis, were a rare shelter in this economic storm. Eschewing the allure of subprime mortgages, and spurning the seductive embrace of exotic securities like the now-reviled Collateralized Debt Obligations, Latin American banking operations emerged largely unscathed from the worst banking disaster since the 1930s.
The global financial crisis is far from over--just Google "Greece" if you want evidence--yet Latin American banking franchises are increasingly lauded for their restraint, conservative balance sheets and solid reserves.
Meanwhile, those that are part of large global banks--the players include Santander, BBVA, Citigroup, Scotiabank and HSBC--have clearly banished any doubts that they are corporate stepchildren. In many cases, they are among the most reliable sources of earnings. Furthermore, their markets are viewed with increasing appeal while Western governments attempt to reboot their own economies.
"HSBC is committed to the emerging markets," said Roy Caple, head of public affairs HSBC Latin America and the Caribbean. Founded as the Hongkong Shanghai Banking Corp. in 1865, London-based HSBC is today the world's largest financial institution thanks largely to an unwavering commitment to globalization that predates the term itself.
With its roots in East-West banking, today HSBC is redoubling its efforts in other emerging markets. "We are witnessing a shift from industrialized to emerging market-led growth, as demonstrated recently." said Caple, who is based in Mexico City. "In the long term, these rapidly growing markets will drive the majority of demand for products and services, including those of the financial sector."
HSBC is among the top five institutions for banking market share in Mexico, Brazil, Peru and Panama.
None of this is to minimize the headaches that Latin America experiences. The region may no longer get pneumonia every time America sneezes, but it is likely to feel a bit peaked. While Latin American banking operations held their ground in 2009, the domestic markets as a...