Latin Americans seen moving more money offshore

By Laura MacInnis

GENEVA (Reuters) - Wealthy people in Latin America are cashing out their investments and moving increasing amounts of money offshore, private bankers catering to the region said.

The global financial crisis has spurred many rich Brazilians and Mexicans to seek more geographically diversified portfolios, cutting their exposure to the emerging markets in which they live and do business.

"Their risk appetite for investment in their own home country has been reduced," said Javier Arus Castillo, general manager of Santander (SAN.MC: Quote, Profile, Research, Stock Buzz) Private Banking International, which works in nine Latin American countries.

Castillo told the Reuters Wealth Management Summit that well-to-do South and Central Americans had responded with alarm to the credit crisis and looming U.S. recession, which threatens to douse their region's recent fast growth.

Many are now skittish about keeping money in Latin American capital and stock markets. "They want to be mostly in cash, mostly conservative investments," he said.

While the banking woes gripping the United States and Europe have not cascaded into Latin America, the prospect of economic slowdown could deal a major blow to commodities exporters and those whose prosperity depends on U.S. trade.

And cooling of previously red-hot demand for minerals, ore and other raw materials -- especially from China -- may spell trouble for export-dependent economies such as Chile.

Latin America's richest people have a long tradition of holding their money abroad -- in centers such as Miami and Switzerland -- to shield themselves from political upheaval, hyper-inflation and other risks.

Private banks expect recent financial market turmoil could further increase their appetite for private banking services.

Both Santander and its Spanish rival BBVA (BBVA.MC: Quote, Profile, Research, Stock Buzz) are looking to expand their presence in Brazil and Mexico, along with Britain's Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) whose recently-acquired Lehman Brothers has long focused on the region.

Castillo said Santander's acquisition of Banco Real, the Brazilian domestic private banking franchise of ABN Amro, would put his bank in a strong position in that market.

Enrique Marazuela, chief investment officer at BBVA Patrimonios, told the Reuters summit his private bank expects to grow faster in Latin America than in Spain in the years ahead.

Both BBVA and Santander said that Latin Americans are almost exclusively choosing the U.S. dollar for their cash holdings.

Moving into another currency "is more of a theoretical question than a real concern for the majority of clients" in the region, Castillo said.

(For the summit blog, see: summitnotebook.reuters.com/)