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Financial services: LatAm Eminence

Financial services challenges and best practices for divestitures and wind-downs in Latin America

Particularities of the Latin America countries can add significant complexity to wind-down and M&A initiatives of companies exiting the region

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Globally, banks are working to define which markets, businesses, client segments and products are ‘core’ or ‘non-core’ to their operations.

Key-players are exiting low performing markets through wind-downs and mergers & acquisitions (M&A), which is having an impact in Latin America.

In addition to the strategic trend of core business specialization, and with a focus onspecific geographies, the recent overall business environment in Latin America has been a catalyst for global banks exiting the region.

The financial services environment in Latin America is challenging, and brings regionally specific challenges, which has accelerated exit strategies of some large financial services institutions. Regional challenges, such as negative Gross Domestic Product (GDP) growth, combined with both political instability, has increased the complexity of running operations in the region.

This, alongside increased financial services regulation and compliance costs, has only served to accelerate exit strategies amongst global institutions.

Whether it be for strategic or operational reasons, companies planning to leave Latin America will face many challenges, such as:

  • Potential impact to franchise value / brand;
  • Increased people attrition and reduced employee engagement;
  • Regional 'rules of the game' dicating exit timelines due to complex local regulation;
  • Regulatory risk in the continued attending of specific regulatory requests after the closure of business operations, with no local staff.
Financial institutions can mitigate these challenges by following best practices such as:
  • Development of a communication protocol and customized messages across employees,clients and other stakeholders to reduce uncertainty;
  • Ensuring that local senior leaders are engaged and onboard;
  • Development of clear project governance and decision making protocol;
  • Assigning a globally experienced team to lead complex initiatives, with skills to quicklyaddress a variety of interdependencies, tasks and decisions.
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