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Banking Internationalisation and the Expansion Strategies of European Banks to Brazil during the 1990s

  • Luiz Fernando de Paula

This paper aims at analysing the determinants of the recent wave of European banks to Brazil in the context of the recent phase of banking internationalisation. The first part analyses the process of banking internationalisation from both an analytical and an historical approach. Focusing on the determinants of the banking internationalisation process, the paper shows that (i) the recent wave of banking internationalisation is characterised not only for financial institutions pursuing their existing relationships, but also and increasingly by a greater integration into the local market; (ii) banks operating in countries where the banking sector is larger and more profitable should be able to export a superior skill and are more likely to expand their activities abroad. The second part of the paper examines the determinants of the expansion of European banks in Brazil, as well as the expansion strategy of the four major European banks in Latin America – BSCH, BBVA, HSBC and ABN-Amro. In this regard, it shows that the recent wave of European banks entering Latin America and Brazil is determined by several factors, that include the process of restructuring the banking sector under the EMU; the dynamics of the internationalisation of the Spanish banks, since they have been the main players in the recent influx of foreign banks into Latin America; the process of market deregulation in the region since the early 1990s, in the broader context of economic and political reforms; the better prospects of the region for increasing returns to financial institutions compared to developed countries, as well as the potential gains in efficiency. Besides, it also shows that one of the common features of the four major European banks in Latin America – BSCH, BBVA, HSBC and ABNAmro – is that all the top four are big universal banks that choose to expand abroad as a strategy to expand their activities. More precisely, expanding abroad is not only a source of diversification of earnings, but also a way to strengthen their position in the European banking market under the pressure of economic and monetary union.

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This chapter was published in:
  • Luiz Fernando de Paula, 2002. "Banking Internationalisation and the Expansion Strategies of European Banks to Brazil during the 1990s," SUERF Studies, SUERF - The European Money and Finance Forum, number 18 edited by Morten Balling, May.
  • This item is provided by SUERF - The European Money and Finance Forum in its series Chapters in SUERF Studies with number 18-1.
    Handle: RePEc:erf:erfssc:18-1
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    1. Helmut Wagner, 2002. "Implications of Globalization for Monetary Policy," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
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    4. Willem H. Buiter & Clemens Grafe, 2001. "Central Banking and the Choice of Currency Regime in Accession Countries," SUERF Studies, SUERF - The European Money and Finance Forum, number 11 edited by Morten Balling, May.
    5. Sanjiva Prasad & Christopher J. Green & Victor Murinde, 2001. "Company Financing, Capital Structure, and Ownership: A Survey, and Implications for Developing Economies," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
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    7. Mauro F. Guillén & Adrian E. Tschoegl, 1999. "At Last the Internationalization of Retail Banking? The Case of the Spanish Banks in Latin America," Center for Financial Institutions Working Papers 99-41, Wharton School Center for Financial Institutions, University of Pennsylvania.
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    12. Rolf Skog, 1997. "Does Sweden Need a Mandatory Bid Rule? - A Critical Analysis," SUERF Studies, SUERF - The European Money and Finance Forum, number 2 edited by Morten Balling, May.
    13. M.M.G. Fase & W.F.V. Vanthoor, 2000. "The Federal Reserve System Discussed: A Comparative Analysis," SUERF Studies, SUERF - The European Money and Finance Forum, number 10 edited by Morten Balling, May.
    14. Joseph Bisignano, 1998. "Towards an Understanding of the Changing Structure of Financial Intermediation - An Evolutionary Theory of Institutional Survival," SUERF Studies, SUERF - The European Money and Finance Forum, number 4 edited by Morten Balling, May.
    15. Bank for International Settlements, 2001. "The banking industry in the emerging market economies: competition, consolidation and systemic stability," BIS Papers, Bank for International Settlements, number 04, 5.
    16. George Gelauff & Corina den Broeder, 1997. "Governance of stakeholder relationships: The German and Dutch experience," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    17. John Calverley & Sarah Hewin & Kevin Grice, 2000. "Emerging Stock Markets After the Crisis," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    18. Rolf Skog, 1997. "Does Sweden Need a Mandatory Bid Rule? A critical analysis," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    19. Alexandre Lamfalussy, 2001. "Reflections on the Regulation of European Securities Markets," SUERF Studies, SUERF - The European Money and Finance Forum, number 14 edited by Morten Balling, May.
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    21. Peter R Haiss & Gerhard Fink, 1998. "Seven Years of Financial Market Reform in Central Europe," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    22. David Llewellyn, 1999. "The New Economics of Banking," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
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