Spanish firms aiming to boost profits in Latin America 10/03/2008 00:00

After a spate of bad news for Spanish companies in Latin America, hit by nationalism and regulatory uncertainty, the bank BBVA announced that it aims to raise its client base in the region by 2010 to 7.5 million.

10 March 2008

MADRID - After a spate of bad news for Spanish companies in Latin America, hit by nationalism and regulatory uncertainty, the bank BBVA announced that it aims to raise its client base in the region by 2010 to 7.5 million.

"We have reason to be optimistic in Latin America," said BBVA President Francisco González in Rio de Janeiro. To justify such optimism he cited rising bank deposits, higher credit to the private sector and lower non-performing loans.

That news was followed by Edesur's 2007 results, which reported a net profit of 161.5 million pesos (EUR 33 million) versus a loss of 63.5 million pesos in the previous year. It is the first time that the Endesa-led subsidiary reported a profit since 2001.

Edesur, which serves Buenos Aires and surroundings, has seen its financial performance undermined by an economic emergency law of 2002 that froze tariffs and devalued the peso.

Despite the good news, Spanish companies such as Repsol YPF have opted to lower risk in countries such as Argentina in order to raise net profits. The recent sale of 14.9 percent of YPF to Argentine company Petersen Energía is one example. The energy group said in its EUR 32.8-billion 2008-12 investment plan that it aims to reduce exposure in the region. Some analysts believe that as long as regulatory uncertainty continues to exist in nations such as Argentina, Ecuador and Venezuela, Spanish companies will be reluctant to invest.

Iberdrola, which has a big presence in Mexico, has opted to invest in more lucrative and more stable markets such as the US. Gas Natural is another Spanish company that has invested in the region with mixed results.

[Copyright EL PAÍS /Eugenia de la Torriente / Jorge Marirrodriga 2008]