What lies ahead for Latin America's financial institutions?

KEY ISSUES TO BE EXAMINED AT FELABAN ANNUAL ASSEMBLY

While the past two years have been difficult for Latin could be much brighter. An upturn in the U.S. economy America's financial institutions, the outlook for 2004 would stimulate trade finance throughout the hemisphere, while financial stability in Brazil, Argentina and other key nations could reopen the door to investment capital flows.

In the meantime, Latin America's regional banks, as well as the international institutions that serve the market, are continuing to take steps to improve the efficiency of their operations and enhance their offerings to business and retail customers.

These external and internal issues will be covered in depth at the XXXVII FELABAN Annual Assembly on November 23-25, 2003, at the Hotel Inter-Continental, Miami. Nearly every bank from Latin America, as well as the major banks from Europe and the United States who do business in Latin America, will be represented. FELABAN, the Federation of Latin American Banks, represents more than 700 banking and financial institutions from 19 countries throughout Central and South America. (For information, visitwww.felaban.com or www.latinbanking.com.)

FELABAN's annual assembly is sponsored by FIBA, the Florida International Bankers Association. FIBA has hosted the Annual Assembly in Miami every other year since 1997. "In the coming year, FIBA will dramatize the importance of Miami as a business and financial center for the region," says FIBA President Thomas P. Noonan, president and CEO, BAC Florida Bank, Coral Gables. "Our other goals include improving the profitability of member institutions and helping them comply with the new rules of international banking established by the U.S. Patriot Act and related legislation."

How well Latin America's banks perform in 2004 will depend in large part on global macro-economic conditions, according to Jaime Rivera, currently chief operating officer and incoming CEO of Banco Latinoamericano de Exportaciones, S. A. (BLADEX), a multinational bank created by the central banks of the Latin American and Caribbean countries that specializes in foreign trade.

"The big question is when will the recovery in the OECD countries begin and how strong will it be?" says Rivera. "What the Latin American economies need is an increase in demand from the U.S. and Europe, leading to improved prices for our commodities and better terms of trade in the region. If that recovery does not take place, it is difficult to envision an environment where Latin America will grow beyond the 2 percent level expected in 2003."

For Latin financial institutions, lower economic growth increases the risk in trade-related transactions. Credit quality tends to deteriorate, adds Rivera, and demand tends to stagnate.

Carlos Perez, managing director and head of Wachovia Corporation's Miami-based Americas Group, agrees with that assessment. "Many Latin American countries will continue trying to reduce their dependence on foreign imports and external financing," he says. "This is likely to result in a credit crunch in some markets. However, as the U.S. economy picks up, we expect to see a rebound in Latin America."

Conditions in Brazil and Argentina will also play a role in determining the region's outlook. The success of Brazilian President Luiz Inacio Lula da Silva in passing social security and fiscal reforms will send a signal to international banks regarding the nation's ability to move forward, according to Rivera. "That will open access to the financial markets, and the cost of funds will diminish," he says, "giving economic growth a shot in the arm."

Marcio Cypriano, president of Bradesco, Brazil's largest private bank, notes, "We are living in a environment where the government and banks are collaborating around the challenges that face the Brazilian economy. Certainly, banks now have a stronger presence in assisting the nation's development."

Building financial ties with non-traditional trading partners is another growth strategy for Latin American banks, according to Edemar Cid Ferreira, CEO, Banco Santos, a fast-growing Brazilian bank. "We are focused in areas where Brazil has trading interests like China, Russia, Middle East and India," he says. "Of course, it doesn't mean to abandon the 'first world' countries like the U.S., Canada, Western Europe and Japan. But we are developing an important relationship with China, and we plan to have a physical presence in the Chinese market."

In the private banking segment, Latin financial institutions will find the current low-rate environment to be a continuing challenge, according to Noonan. "Borrowers love low rates, but deposit rates of 1 percent are a challenge for savers and people on fixed incomes," he says. One potential solution is investing in residential or commercial real estate in growth markets like South Florida. "We expect mortgage rates to go up a bit," Noonan says, "but they will still be low by historical standards, and that's very positive for the real estate business."

For Latin banks, continuing adaptation of new technology--including online services--may be a critical factor in boosting profitability. "If you compare the efficiency ratio of banks in Latin America with international institutions, we still have a way to go," says Rivera. "But that's good news because there is still room for improvement. The majority of Latin banks recognize that and are allocating resources to address that need."

BRADESCO: BRAZIL'S LARGEST PRIVATE BANK

Established by Amador Aguiar in 1943, Bradesco has been Brazil's largest private bank since the 1950s. Today, Bradesco has more than 8,100 branches, including approximately 2,800 offices in postal service branches that provide millions of Brazilians with convenient access to bank services.

"In serving the financial needs of both consumers and companies, Bradesco plays a key role in the development of Brazil's economy," says President Marcio Cypriano. "We are also committed to global banking values like transparency in transactions and market relationships that add value to our shareholders, clients, employees and society."

In the first quarter of 2003, Bradesco achieved a net profit of US$181.3 million with total revenue of US$4.18 billion. Total assets rose to US$52 billion. "We believe in reliable operations, strict control of risks, increasing our efficiency and controlling costs in order to maintain our profitability," says Cypriano. Bradesco recently purchased the BBVA Banco--Banco Bilbao Vizcaya Argentaria Brasil S.A. and took control of management and handling of portfolio of assets and investment fund of JP Morgan Fleming Asset Management. In the international banking arena, Bradeso has operations in Argentina, The Bahamas, Cayman Islands, Japan, Luxembourg, and the United States (Bradesco Securities, Inc.).

From ATMs to online services, Bradesco is a leader in bringing banking technology to the nation. Bradesco was the first bank in Brazil and fifth in the world to offer Internet banking in 1996. Today Bradesco offers 210 services from its website, and has 4.9 million registered Internet banking clients. Bradesco also has 21,000 ATMs across the nation.

Bradesco serves all segments of the Brazilian market, including corporate banking, private banking, and wealth management. The institution is also active in financial areas like Brazil's private retirement fund, insurance, leasing and capitalization services.

To help address Brazil's social issues, the Bradesco Foundation focuses on supporting free education of more than 105,000 students (children, youth and adults) in 39 schools throughout the country. The foundation also supports initiatives in culture, environment, sports, education, information and citizenship.

For more information, visit www.bradesco.com.br.

WACHOVIA: APPLYING 'BEST PRACTICES'

Because trade finance is the lifeblood of commerce in Latin America, international banks need to apply best practices and know their customers, according to Carlos Perez, managing director and head of Wachovia Corporation's Miami-based Americas Group.

"Our group focuses on short-term trade finance, and we are known for our conservative, steady approach to the market-place," says Perez. "Wachovia has a deep commitment to the Latin American market."

With more than 200 years of international banking experience, Wachovia's International Banking group provides solutions that help financial institutions, corporations, government agencies and individuals conduct their business in almost any corner of the globe. Wachovia provides a full array of solutions to meet global payments, collections, trade, cash management, financing, investment, foreign exchange, outsourcing and capital markets requirements.

Wachovia assists many Latin American banks in serving their customers more effectively. Because many Latin banks are not bound by legacy systems, they are able to leapfrog into today's technology more quickly. "When we roll out an online product, Latins are the first to embrace it," Perez says. "Our cyber family of products has met with great success, and our customers are actively selling these types of services to their consumer and business clientele as well."

Based in Charlotte, North Carolina, Wachovia Corporation INYSE:WB) is one of the largest providers of financial services to retail, brokerage and corporate customers in the United States, with assets of $364 billion at June 30, 2003. Wachovia is also the nation's second-largest treasury management services provider for both domestic and international treasury management and consulting services. Cash flow solutions include, among other products, e-commerce, integrated payables and receivables, information reporting via Web or PC, and risk management. Wachovia has more than 30 international offices and 3,000 correspondent banking relationships in 130 countries. For more information, visit wvvw.wachovia.com.

BAC FLORIDA BANK FOCUSES ON REAL ESTATE AS DIVERSIFICATION TOOL

For many Latin Americans, real estate plays an important role in diversifying their asset holdings. As South Florida's leading provider of real estate loans to non-U.S. residents, BAC Florida Bank serves international buyers in both residential and commercial real estate transactions.

"As a trusted advisor providing customized financial services, we use real estate as a key ingredient to help our clients avoid excessive asset concentrations and risk," says Thomas P. Noonan, president and CEO, BAC Florida Bank, which offers private banking and selective trade financing services in addition to real estate lending. "We can help with virtually any type of mortgage loan request."

BAC Florida Bank also offers its clients the benefits of up-to-date information on Florida's real estate markets in Miami, Fort Lauderdale and northward. "We follow the trends in local markets, and know which segments may offer the best value," Noonan says.

Based in Coral Gables, Florida, BAC Florida Bank has more than $665.9 million in assets. "Our bank has an unparalleled ability to meet the specialized financial needs of our international client base, coupled with the attentive personal service of a small, private bank," Noonan says.

For more information, visit www.bacflorida.com.

BANCO SANTOS SERVES BUSINESS MARKET

For Brazilian companies, advanced financial technology and services play a vital role in building customer relationships, speeding payments and enhancing profitability. Under CEO Edemar Cid Ferreira, Banco Santos has become a leader in supporting its clients in the middle and upper-middle business markets through online services.

"We provide technology to our clients to use with their suppliers and clients," says Ferreira. "We support their supply chains, as well as helping to build relationships between companies and clients." Founded 34 years ago, Banco Santos offers commercial and investment banking services, as well as insurance and capitalization services. The bank has a presence in New York on Wall Street to assist its clients with raising equity.

By focusing on the business market, Banco Santos has become the eighth largest private bank in Brazil with US$2.5 billion in assets and approximately 600 employees. In 2002, the bank's earnings rose about 64 percent to approximately US$30 million. Banco Santos was recently recognized by Getulio Vargas Foundation as the best middle-market bank in Brazil.

Headquartered in Sao Paulo, the bank has offices in Brasilia, Belo Horizonte, Santos, Curitiba, Florianopolis, Fortaleza and Rio de Janeiro. For more information, visit www.bancosantos.com.br.