Shaking off a reluctance to pursue markets outside the United States, NationsBank Corp. is building a network of offices throughout Latin America.
In June, the Charlotte, N.C., banking company opened a representative office in Sao Paulo, Brazil. It is in the process of opening others in Buenos Aires and in Bogota, Colombia.
Executives said the three offices-along with a two-year-old subsidiary in Mexico City-will focus on serving the borrowing and investment banking needs of U.S.-based corporate clients doing business in the region.
But NationsBank is also striving to attract local companies, particularly those that have relationships with U.S. businesses.
"If you just stick to U.S. businesses, you're not going to get any new business," said Robert D. Bailey, NationsBank's senior international banking executive.
The moves highlight a fresh push by many U.S. banks into Latin America.
Lured by the region's fast-growing economies, the banks are rapidly building up local services for corporate customers and consumers. This is in marked contrast to the mostly sovereign, cross-border lending that characterized business with Latin America in the 1970s and early 1980s.
For NationsBank, the Latin American gambit represents a change in thinking about international expansion.
As recently as last November, chairman Hugh L. McColl Jr. termed California "the foreign country I'm most interested in.
"One in eight Americans live in California, and until I get to California, I couldn't give a damn about foreign countries," he said.
Though NationsBank has had a long-standing office in London and other offices in Asia, they are used mostly to serve U.S.-based clients rather than as bases for international expansion.
But executives at the $239 million-asset banking company, the United States' fourth-largest, has begun to recognize that they could ill afford to ignore international opportunities. Unless NationsBank moved into Latin America, they reasoned, its corporate clients would move to other banks.
"We kept hitting a ceiling with our clients," said Richard Gross, president of NationsBanc Capital Markets Inc., the broker-dealer subsidiary.
"They kept saying, 'We have needs beyond the United States, and if you want to be our lead bank, you will need to provide for us wherever we operate.'"
Executives estimated that 30% of their corporate customers are engaged in business ventures in Latin America, including 300 in Brazil alone.
Looking well beyond revenues from U.S. corporations, the bank would like to increase its business with foreign corporations, especially in sectors like energy, media, telecommunications, utilities, and pulp and paper.
NationsBank, its executives said, wants to go beyond arranging corporate loans and trade finance to offering advisory services, merchant banking, bond and equity underwriting, project finance, and structured deals.
Although the bank's international sights are on Latin America for the moment, it is also studying business prospects in Asia, where it has branches in Hong Kong, Seoul, Singapore, and Taipei, and representative offices in Jakarta, Bombay, and Tokyo.
"They're quite a large lender in a number of specialized industries, so it makes sense to use some of that expertise in Latin America," said Sally Pope Davis, a banking analyst at Goldman, Sachs & Co. in New York.
The Latin American strategy also dovetails with NationsBank's recent decision to acquire San Francisco-based Montgomery Securities, an enlargement of the bank's capital markets capabilities throughout the world.
NationsBank's newfound enthusiasm for Latin America follows one of the biggest financing deals in recent years in the region.
In May, a consortium, led by the Brazilian steel company Companhia Siderurgica Nacional, orCSN, paid $3.1 billion for control of the state- owned mining company Vale do Rio Doce, or CVRD.
To facilitate the acquisition, NationsBank arranged a $1.2 billion loan for CSN and also set up an investment fund that pitched another $375 million into buying CVRD.
"To compete with other banks doing wholesale banking in Brazil, to be in the deal flow, you have to be a player in that arena, you have to have a track record," Mr. Gross noted. "You can't go to a client to pitch a deal without one, and taking part in the CVRD sale gave us that track record"
Bankers at rival institutions said NationsBank has ample room to expand in Brazil and other Latin countries, even if it is now competing with long- standing international veterans such as Chase Manhattan, J.P. Morgan, Citibank, Bank of America, BankBoston, and Banker's Trust.
"There's room for NationsBank here because, with the growing number of privatizations, M&A's and joint ventures happening in Brazil, the market needs more wholesale banking services," said Marcelo Lirio, the manager director and head of corporate finance for the ING Barings office in Sao Paulo.
Carlos Henrique Catraio, the vice president of financial institutions and trade for Bank of America's Sao Paulo office, expressed similar views.
"There's certainly room for another player in a market where a reasonable-sized deal in Brazil two years ago was between $50 million and$100 million and where now it's between $250 million and over $1 billion," said Mr. Catraio.
"Given these opportunities," he said, "it doesn't surprise me that a bank with the size and presence of NationsBank has finally entered a wholesale banking market as relevant as Brazil."
"What's surprises me," he added, "is why NationsBank didn't come down sooner."
The answer, according to Mr. Gross and Mr. Bailey, is that NationsBank didn't want to go abroad till it solidified its business in the United States, where its operations brought in $2.45 billion in 1996 net profits and should pile up an estimated $3 billion in 1997.
"Our philosophy has been ... get good in your home country, ... build up large investment banking capabilities in the domestic market and then venture overseas," said Mr. Gross.
But with the CRVD deal under its belt, NationsBank is ready to do more deals with Latin American clients who are partners or potential partners of U.S. companies.
One example: CSN and Nucor Corp., a major U.S. steelmaker which is also a NationsBank client, are exploring plans to build a $700 million minimill in Brazil.
"If CSN and Nucor decide to invest in a minimill in Brazil, we'll likely get financing business from both of them," Mr. Gross said. He added that NationsBank also wants to develop Brazil-based U.S. corporate clients, like Brazilian subsidiaries whose U.S. parent companies are NationsBank clients.
NationsBank is also targeting privatizations and plans to arrange $1.5 billion more in Latin American financing this year and $3 billion more in 1998.
Most will be for U.S. clients who want to participate in privatizations, mainly telecom and energy firm selloffs. In Mexico, for example, the bank recently arranged $800 million of financing for AT&T to provide long- distance telephone services.
"U.S. investors are making more and more investments abroad," said Mr. Gross. "We're offering to finance those investments in Brazil and elsewhere."
Global finance, comprising corporate finance as well as capital markets activities, currently represents roughly one-quarter of NationsBank's total revenues. Executives said they hoped to increase international revenues to between 10% and 20% of the total for global finance.
That would come to between 2% and 4% of total revenues.
And while that goal is small as a percentage of NationsBank's total activities, it's a big step for a bank that, before the CVRD sale, wasn't even ranked among the top 15 foreign lenders in Latin America.
"We're not dwelling on the past," Mr. Bailey said. "We're looking to the future."
