Argentina’s brokerages are restructuring after President Javier Milei took away lucrative arbitrage opportunities that juiced their business when he rolled back capital controls.
With more than 280 brokers operating in the Latin American country — a figure unmatched anywhere else in the region, according to local regulator CNV — competition has always been fierce. It’s even more so now that exploiting the gap between the official and parallel exchange rates doesn’t generate as much profit, and that banks can sell dollars now, too. By comparison, that far exceeds the number of brokers in Brazil, Mexico, Chile and Peru.
Well-known brokerages and financial technology firms are seizing the moment, applying for banking licences and acquiring bank assets to boost their slate of offerings. However, they’re entering a crowded space: Only a fraction of Argentina’s banks are profitable, which is leading Milei’s government to push for consolidation.
“A market with capital controls tends to favour brokers and fragmentation,” said Juan Manuel Truppia, head of sales and trading at one618 Group, a Buenos Aires brokerage. “But a market without controls favours bank participation, and available capital becomes more relevant. There’s a shift toward the banking sector to get ahead of a market that’s normalising.”
Among the brokerages looking to expand into banking is Allaria, the country’s largest by fixed-income trading volume, according to the Argentine stock exchange. The company has acquired a small stake in Banco del Sol, the digital banking arm of Grupo Sancor Seguros. With a nationwide presence, the bank is viewed as a scalable platform in retail banking, according to a person familiar. Allaria plans to grow its stake over time, the person said.
In another high-profile move, Eduardo Savastano — a former Citigroup executive now at GMC Asset Management — is preparing to acquire almost all of Banco Masventas, a regional lender in northern Argentina that specialises in remittances and cross-border transactions. The acquisition would allow GMC’s Savastano to build a financial foothold with regulatory infrastructure already in place, according to a person familiar.
Meanwhile, MercadoLibre applied for an Argentine banking licence in May, the first time it’s done so since the Latin American e-commerce giant was founded in 1999. If approved, it would mark a major pivot from its long-standing reliance on non-bank channels.
Brokerages are facing tectonic shifts in their commercial strategy thanks to Milei’s reforms. From 2019 to early 2024, strict capital controls fuelled a massive boom in so-called blue-chip swap operations, which were the only way to buy dollars legally. Brokerages quadrupled their headcount, launched apps, opened new offices and quintupled their profits as a result.
But blue-chip swap activity has dwindled since Milei took office and devalued the peso, leading spreads to fall to zero after most currency controls were lifted. Meanwhile, traditional banking operations, including official-market foreign exchange and retail lending, are gaining ground.
Trading revenues, which hit records as recently as two years ago, have dropped more than 50 percent at some firms, according to an analysis of financial statements. The exchange-rate gap, meanwhile, narrowed from 200 percent in December 2023 to nearly zero today, based on data compiled by Bloomberg.
“We’re already seeing a drop in profitability margins for brokers,” said Julio Merlini, chief executive officer of Balanz Capital Valores, the largest brokerage by headcount in Argentina. “Many brokers were heavily reliant on blue-chip swap operations. Without efficiency or volume, it hits hard.”
Once acting almost like informal currency exchanges — offering dollars via securities transactions — brokers are returning to more traditional intermediary roles, such as buying and selling securities or investment-focused instruments. The number of brokers in Argentina could decline by a third as a result, Merlini predicted.
But there are too many commercial lenders as well. Central Bank Governor Santiago Bausili has been delivering that message to market players recently, according to a person with direct knowledge of the matter. Bausili suggested that of the 73 banks currently operating in the country, only 15 to 20 are generating meaningful revenue, the person said. A Central Bank spokesman declined to comment.
“The government’s goal is for banks to go back to being banks — to lend to the private sector,” Economy Minister Luis Caputo told a business audience in Buenos Aires last year. In recent decades, domestic lenders had instead earned most of their income by investing in Central Bank debt securities.
Milei’s policies have improved the climate for banks. But under current rules, brokers can’t participate in sovereign debt auctions if their dollars entered the country through a blue-chip swap. That’s prompted some them to seek access to the official FX market, as well as a banking licence.
Others want to recover lost FX income by moving into the official dollar business, where spreads remain attractive. Lending, too, is attractive again since volumes have surged and interest rates far exceed deposit costs — a classic source of banking profits.
Balanz, however, isn’t looking for a banking licence. Instead, it’s working to boost its assets under management, which currently stand at about US$10 billion. The firm has begun talks with around 10 smaller brokers, exploring potential acquisitions, Merlini said.
The move reflects a push toward inorganic growth in the sector, as larger players see an opportunity to consolidate amid rising costs that are hitting smaller firms the hardest. For bigger brokers, the impact of those costs is relatively marginal, giving them an edge.
Bankers acknowledge that advantage. After years of heavy regulation, lenders grew large and slow while brokers learned to operate with sharper commercial instincts.
“With shrinking margins, a heavy legacy of regulatory costs, and growing digital competition, brokers that fail to scale or differentiate face the risk of falling behind,” said Anna Cohen, managing partner of Cohen Aliados Financieros. “The consolidation we’re seeing is strategic. All players will need to return to the traditional businesses that align with their core nature.”
by Ignacio Olivera Doll, Bloomberg
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