2 Banks Increase Lending to Latin America

Citigroup Inc., the world’s biggest financial services company, and BankBoston Corp. increased loans to Latin America in the first quarter, reversing months of reductions as economies in the region begin to rebound.

The two banks, with the biggest branch networks in Latin America among U.S. banks, raised their exposure as rivals continued to cut. BankAmerica Corp., Chase Manhattan Corp. and J.P. Morgan & Co. all reduced their exposure, according to filings with the Securities and Exchange Commission. “Those banks that have a commitment to the region have come to terms with how much exposure they’re comfortable with,” said Diane Glossman, a bank analyst at Lehman Bros. Holdings Inc. “I don’t think it’s odd that Citigroup and BankBoston are expanding at a time when Chase is declining.”

The reductions, though, may mark the end of almost a year of cuts. In March, banks including Chase Manhattan and Bank of America pledged to stop cutting credit to Brazil, responding to pleas by central banker Arminio Fraga. Since then, Brazil’s economy, the region’s biggest, rebounded faster than expected.

Citigroup increased its exposure to Brazil by 17% in the first quarter to $5.3 billion. For Mexico, its exposure increased to $6.1 billion from $5.9 billion.

Citibank Vice Chairman William Rhodes coordinated efforts at the request of the Brazilian government earlier this year to get creditor banks to maintain credit lines to Brazil in the wake of the devaluation.

BankBoston, for whom Latin America accounts for about one-fifth of its profit, increased its exposure to Argentina and Brazil to about $3.4 billion from $3 billion.