Banco Latinoamericano de Exportaciones, S.A. (BLX)



Banco Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX), formerly known as Banco Latinoamericano de Exportaciones, is a special-status, supranational trade bank that does business as Bladex.[1] Based in Panama, its shareholders include central banks and state-owned entities in 23 countries in the Region, as well as Latin American and international commercial banks, along with institutional and retail investors. Through September 30, 2012, Bladex had disbursed accumulated credits of approximately $188 billion.[2]

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Bladex’s share price has mirrored earnings per share and dividends.

History and Corporate Governance

Bladex was established in 1975 by 23 Latin American and Caribbean central banks in order to promote trade financing in the region. These central banks, via their ownership of class A shares, possess 16.85% ownership in Bladex but retain supermajority voting rights when it comes to making changes to Bladex’s Articles of Incorporation, while select commercial banks own 6.73% of Bladex by way of class B shares. Bladex became the first Latin American bank to be listed on the NYSE when it offered class E shares for public trading in 1992 under the ticker symbol BLX. Ordinary investors and financial institutions now own 76.42% of Bladex through these class E shares, which elect five of the ten seats on Bladex’s board of directors.[3]

Bladex is a leader in corporate governance standards, as demonstrated by its commitment to transparency and its participation in the NYSE’s International Advisory Committee. Furthermore, Bladex has proven its dedication to rewarding shareholders by returning $384 million of capital through dividends and stock buybacks over the past eight years.[4]

Business Segments

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Source: Bladex Third Quarter and Year-To-Date 2012 Business Highlights

Bladex’s primary source of revenue is its Commercial Division, which provides a full range of financial intermediation services and fee generation activities tied to foreign trade transactions, including co-financing arrangements, underwriting of syndicated credit facilities, structured trade financing, asset-based financing in the form of factoring, vendor financing and leasing, and other fee-based services, such as electronic clearing.[5]

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Source: Bladex Third Quarter and Year-To-Date 2012 Business Highlights, pg. 1

Adjacent segments of Bladex are its Treasury and Capital Markets Division, which conducts risk management and funding operations, and the New York City-based Asset Management Unit, where Bladex runs the equivalent of a miniature hedge fund that attempts to leverage the Bank’s unique knowledge through a Latin America macro strategy utilizing a combination of trading instruments. While the Asset Management Unit has lost a quarter of its value over the past two years, funds under management represent less than 2% of the Bank’s total assets. Bladex is in advanced stages of negotiating a transaction to divest the Unit.[6]

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Source: Bladex Third Quarter and Year-To-Date 2012 Business Highlights, pg. 3

Competitive Advantage

Bladex’s competitive advantage stems from its 30+ years of regional market expertise, a coordinated network of foreign trade specialists that serves as a single point of contact for both importers and exporters, and income tax exemption on account of a special contract with its home country of Panama. Furthermore, because of its unique institutional backing, robust capitalization, and prudent risk management, many counterparties recognize Bladex as a preferred creditor, thus affording the Bank ample and inexpensive funding.

Bladex maintains solid financials and actively manages and mitigates much of its risks. For instance, a substantial portion of the Bank’s investment portfolio has been transferred to floating interest rate securities in order to reduce interest rate risk. Per company policy, Bladex uses cross-currency swaps to hedge all of its currency exposure. In addition, while 80% of its bond portfolio is allocated to Latin American sovereign and state-owned enterprise debt, it is not concentrated in any single country. Lastly, Bladex has stable and diversified sources of funding which have proven to be reliable even in a crisis. For example, in the fallout of the Global Financial Crisis, the Bank’s net income contracted just 22.4% from 2007 to 2009 and BLX shares now exceed their pre-recession levels.

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Source: Bladex Third Quarter and Year-To-Date 2012 Business Highlights, pg. 5

Significant Trends

The volume of Latin American trade activity is positively correlated with commodity prices. Inter-regional exports have increased on average by 14.0% year-over-year between 2005 and 2011, largely due to higher demand by Asia’s growing economies for raw materials, especially metals, fuel, and food. At the same time, intra-regional exports grew even faster at an annual pace of 17.8%.

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Source: Bladex Third Quarter and Year-To-Date 2012 Business Highlights, pg. 4

Catalysts for future growth include the new addition of Venezuela to the Mercosur trade bloc and the expected completion of the Panama Canal expansion project in 2014, which is anticipated to nearly double the capacity of cargo volumes through the passage, consequently lowering transportation costs and inciting more trade in the Latin America region.[7]


Bladex competes with diversified regional and multinational banks that provide trade financing services, including BanColombia S.A. (CIB), Banco de Chile (BCH), Banco de Chile (BCH), Banco Santander-Chile (SAN), Itau Unibanco Holding SA (ITUB), and Citigroup (C).


  1. About Bladex: History
  2. Bladex 3Q2012 Quarterly Earnings Release, pg. 14
  3. Articles of Incorporation of Banco Latinoamericano de Comercio Exterior, S.A., pg. 5
  4. Banco Latinoamericano de Comercio Exterior's CEO Discusses Q3 2012 Results - Earnings Call Transcript
  5. Investor FAQs
  6. Bladex to Sell Hedge Fund Division
  7. Mercosur Suspends Paraguay, Embraces Venezuela
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