Why are Banks in Argentina Stealing All the Latin Limelight? GGAL, BFR, BMA

The Death of a Former President Signals a Big Change

In late October when news spread that Argentina's former president, Nestor Kirchner, had died Argentinean banks and businesses took it as a signal that it’s time for ‘pro-business’ government leadership.

Mr. Kirchner led the country’s debt restructuring in 2005 and a soaring inflation rate developed.

On news of his demise, shares of Argentine banking group Grupo Financiero Galicia (GGAL) gained over 25%.

Brazil was no longer the only ‘big hope’ in Latin America. Sentiment shifted almost overnight and other Argentinean banks and businesses took off like GGAL.

But over the last year, other banking concerns in Argentina had been performing well and the death of the former leader was only an iconic milestone for a catalyst of change and fresh political faces that could get the country in line with its successful neighbors.

If you look at the following three prime Argentinean banks you’ll see phenomenal YOY growth rates:

GGAL has gained 90.94% over the last year and BBVA Banco Frances SA (BFR) has gained 65.03% over the last year. Banco Macro SA (BMA) has gained 72.54% over the last year. Brazil’s giant Banco Bradesco SA (BBD) in comparison has gained 5.14% over the last year.

If you want two other banks in the Southern Hemisphere for growth comparables look at; Credicorp (BAP) in Peru which has moved from $75 in March to $126 today (a 68% rise) and Banco Santander Chile (SAN) which was at $62 in March and is $92.53 today (a 49.24% rise).          

As currency shifts around the globe affect banks and governments, so too will internal taxes and regulations, but Latin America, led by Brazil, is becoming a powerhouse consortium of countries that in the ‘New Paradigm’ will fall in line with ‘Asia’ and the ‘Euro-Zone’ as global areas of economic importance.