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shareholder return (adjusted for
risk and local market influences) of 12.9 percent
per year— the highest for any bank.
“Banks in the BRIC countries
will continue to grow much faster than their Western
peers and a few could emerge as global challengers
over the next five to ten years,” said Tjun
Tang, one of the report’s co-authors and a BCG
partner. He predicts that BRIC-country banking revenues
will increase by an average of 8 percent, on an inflation-adjusted
basis, each year until 2015. The following sections
explore the banking sectors in each of the BRIC countries
in greater detail:
Brazil
GDP size US$1,536bn
Population 186m
Among the BRIC nations, Brazil has the most developed
economy, but the slowest growing
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market (Brazilian annual real GDP
growth averaged 2.6% since 2000, compared to 9.6%
in China, 6.7% in Russia and 6.7% in India). Industry
experts regard Brazil’s weak performance as
largely due to outstanding structural impediments
that result in high interest and tax rates, which
effectively block faster growth. Chief among these
is a massively bloated public sector, in addition
to
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outmoded labour system and an overtaxed and overregulated
business environment. Nonetheless, the country has enjoyed
a sustained period of macroeconomic stability and shows
an immense potential to grow further.
In the Latin American region, Brazil
not only has the largest economy, but also with over
160 banks and 63000 bank branches, the largest banking
market. The country has witnessed a high level of consolidation
which has seen the number of banks in the country drop
from 253 in 1996 to 163 in 2005. Consolidation has led
to increased concentration, so Brazil’s top 10
banks now control roughly 70 percent of all assets in
the banking system. Interestingly, Brazil is the only
country in Latin America where the leading players are
local. Among the 10 largest banks in Brazil in terms
of assets, seven are Brazilian and three are foreign.
The biggest banks by assets in Brazil are the state-
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