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By Guillermo Parra-Bernal and Aluísio Alves
SAO PAULO, Dec 9 (Reuters) - Fees for advising on investment banking in Latin America are set to tumble this year, as equity capital market activity retracts across the region and a dealmaking drought in Brazil weighs down revenue, a senior executive at Brazil’s Itaú BBA said on Tuesday.
Revenue from advising on takeovers, bond and stock sales and syndicated loans reached $1.83 billion through Dec. 8, down 20 percent from last year, Jean-Marc Etlin, Itaú BBA’s head of investment banking, said at an event on Tuesday. Moderate improvements in debt and equity capital markets are expected next year, he said.
The data underscore the extent of a turbulent year in some major Latin American economies like Brazil, where a competitive presidential election and declining commodity prices and currency shook business confidence. The outlook for capital markets activity looks more promising in countries like Mexico and Colombia, Etlin noted.
“Next year should be more constructive for some markets and some segments ... for instance, initial public offerings in Brazil,” he said. “Debt capital markets activity should improve too, especially in Brazil.”
Brazil’s share of the region’s total fee pool slipped to 34 percent this year from 38 percent a year earlier and a record 66 percent in 2006, said Etlin, who has been Itaú BBA’s main dealmaker for about nine years. Receipts from stock underwriting in Latin America dropped by 49 percent, he added.
The executives declined to disclose Itaú BBA’s revenue data.
Etlin said Itaú BBA earned record fees despite a challenging 2014, and is now ranked third in Latin American fee pool league tables, citing data from research firm Dealogic. In 2013, the São Paulo-based based bank was fourth, according to Dealogic.
Etlin said Itaú BBA’s goal is to rank among the top three Latin America fee earners in the coming years.
The bank participated in 15 percent of equity capital market transactions and 7 percent of debt capital markets deals in the region, both unchanged from 2013, while the share of M&A rose to 3 percent from 2 percent.
Debt and stock underwriting plus merger advisory revenues from Latin America, excluding Brazil, are equivalent to 10 percent of the investment bank unit’s consolidated revenue, he added. (Editing by Jeffrey Benkoe)