Surveying the corporate merger scene in Latin America, a question must be raised: Why haven't more U.S. banks gotten in on the action?

After all, U.S.-based manufacturers and service companies haven't been shy. Five of the top nine M&A deals completed by foreigners in Latin America in 1996 involved U.S. buyers. However, only five of the 36 bank acquisitions completed in 1996 and the first half of 1997 were made by U.S. banking companies, and only three of these five U.S. acquirers were commercial bank affiliates.

While we are beginning to see activity by BankBoston Corp. and others recently, European and Canadian banking companies in general, and Spanish banks in particular, still dominate the acquisition market in this region.

What happened? And what does the future hold for U.S. banks in the region? Are they doing too little, too late, or do they alone see a path that angels fear to tread?

It is likely that the lack of participation of U.S. commercial banks in direct acquisitions of Latin banks is a result of several factors. Among them are a U.s. banking industry trend favoring capital markets deals, a lack of interest in local currency banking, and the lingering effects of the 1980s debt crisis.

U.S. banks continue to view asset-intensive networks as expensive. They are beginning to revisit the international network structures they once overbuilt, however, and are focusing first on the "tiger" economies of Asia. The reduction of expert staff that occurred in the 1980s also has had an effect. Without a significant presence on the ground in Latin America, it is more comfortable and safer to generate fee revenues by helping others to make investments than to make the investment oneself, and fee business is a watchword of U.S banking in a world of declining spreads.

That U.S. commercial bankers remain cautious during this most recent Latin resurgence is in part also due to doubts about whether all the ills that led to past crises have been cured.

Nevertheless, there is no question that Latin America today is a far more investor-friendly place than it ever has been, rife with opportunities to profit from banking business conducted locally.

We are seeing the growth of previously unheard of consumer and mortgage lending in local currency, for example, which are not easily susceptible of participation except through local legal entities. Further, as markets open up (Mexico under Nafta is a prime example), local banks are seeking to protect their markets through alliance with or acquisition by strong international banks.

There are many ways, of course, to profit from banking in Latin America besides buying up local institutions. And U.S. commercial banks are certainly engaged in the market. Indeed, the great majority of all acquisitions in Latin America are advised by U.S. institutions, and short- term trade finance and longer-term project financing are also rising in volume.

To take maximum advantage of prospective growth in local currency banking, however, or otherwise fully to participate in the local market, one must have a local banking subsidiary with a share of the market. Obviously, the fastest way is to buy one.

Perhaps U.S. commercial banks are not interested in this traditional type of banking. The opportunity appears to be great, however, and a number of banks headquartered outside the United States are aggressively pursuing it. For example, the Financial Times reported last July that Hongkong and Shanghai Bank recently bought Banco Roberts outright for $600 million to take advantage of expected growth in Argentina.

It is likely that the best opportunities to buy have already passed with little participation by U.S. commercial banks. If so, this may have been the missed opportunity of a lifetime for them to acquire or maintain a leadership position in the region.

It is true that to have done so would have required assumption of some risk of nationalization, devaluation, and the like that the 20th century too often has seen in this region. And one can always participate in a market without a local network.

However, if the opportunity that a local entity and network open up is as great as the acquiring banks seem to think, U.S. banks may find that they did too little, too late.

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