BrigadeiroFaria Lima, the São Paulo avenue which will be flooded with flag-draped soccer fans in June – not PraçaAlfredo Egydio de Souza Aranha,the company’s headquarters –was the place for the interview withRoberto Setubal, thevice chairman of the board, shareholder and CEO of Itaú Unibanco, the largest bank in Latin America and in the Southern hemisphere by market value.
At one of the highrises on the avenue, Roberto Setubaldiscussed the bank’s achievements and challenges – their international expansion plans, their product strategies, and their vision about the banking business. “Banking is going through a major transformation because of regulation,” he said. He believes that increases in required capital with Basel III norms, will increase the cost of capital on a global scale. Hence, banks will have to leave activities where they do not make enough money to cover the higher cost of capital. That will open new competitive spaces for funds, and other non-bank financial operators, he stated.
Besides, he expects global and international banks to feel more intensely the consequences of the new environment, as countries require them to have capital and liquidity accounts on a local basis. They will be competing on the same conditions of local banks, and lose the synergies of having capital on a consolidated basis.