Why are banks in Latin America so extraordinarily profitable, and what does their profitability reveal about the region’s political economy? What is the impact of these high profit rates? These questions lie at the centre of Guillermo Celso Oglietti and Sergio Martín Páez’s A mão visível do banqueiro invisível. Challenging the longstanding assumption, dating back to Bagehot’s nineteenth-century writings, that financial development promotes economic growth through the efficient allocation of capital, the authors argue that Latin American banking systems function primarily as mechanisms for the extraction and appropriation of wealth. Crucially, they contend that, in a world structured by relations between centre and periphery, the supposedly ‘optimal’ allocation of capital may amount to capital flight, channelling resources away from peripheral economies towards more profitable investment opportunities abroad. Their central argument is that the extraordinary profitability of the region’s banks cannot be understood independently of the concentration of financial power, the internationalisation of capital and the institutional arrangements that sustain financial rents. The book offers an empirically rich and politically engaged contribution to longstanding debates about dependency, financialisation and the obstacles to economic development in Latin America.
The argument is developed across five chapters, combining an extensive comparative analysis of banking systems with a broader critique of contemporary capitalism. Drawing on financial statements from 358 institutions across ten Latin American countries, representing approximately 87 per cent of the region’s GDP, the authors construct a valuable comparative picture of banking ownership, concentration and profitability. This empirical foundation is one of the book’s principal strengths. Rather than treating Latin American finance as a homogeneous system, the analysis identifies significant differences in market structures, the presence of public banks and the relative importance of domestic and foreign capital.
The book’s structure is methodical, moving from description to explanation to prescription. The first three chapters, covering 2019 as a baseline year, provide a comprehensive radiography of the Latin American banking system. The data are drawn from regulatory filings, standardised for comparability, and presented with a clarity that makes the analysis accessible without sacrificing rigour.
The first chapter maps the ownership and distribution of banking assets. Brazil emerges as the dominant financial market, accounting for approximately 57 per cent of the US$3.8 trillion in banking assets examined. Across the ten countries, domestic private banks control around 40 per cent of assets, public banks 32 per cent and foreign-owned institutions 28 per cent. The authors pay particular attention to the expansion of Spanish financial conglomerates, notably Santander and BBVA, alongside the growing regional presence of Brazilian banks. These findings demonstrate how the internationalisation of banking has transformed the ownership structure of Latin American finance, while highlighting the continued significance of national institutions and public ownership.
The second chapter presents perhaps the book’s most striking finding: Latin American banks have consistently achieved profitability substantially above that of their counterparts in central capitalist economies. The authors show that average returns on assets exceeded 2 per cent throughout much of the period after 2005, roughly double or triple those observed in North America and Europe. In 2019, the region’s average return on assets reached approximately 2.4 per cent. Crucially, these exceptional returns persisted during periods of both economic expansion and stagnation. Foreign financial conglomerates also obtained substantially higher returns from their Latin American operations than from their home markets. The evidence raises an important question about the relationship between financial profitability and economic development: why has the expansion of banking generated such considerable returns without an equivalent transformation in productive investment?
Chapter Three examines the sources of this profitability, identifying the interaction between monetary policy, financial concentration and the structure of banking activities. Interest income remains the principal source of revenue across most countries, although financial and foreign-exchange operations assume greater importance in Argentina and Brazil. The authors challenge explanations that attribute high interest spreads primarily to risk or operational inefficiency. Instead, they emphasise the capacity of concentrated banking systems to appropriate extraordinary returns under favourable monetary and regulatory conditions. Their comparison of public and private institutions is particularly illuminating, questioning the widespread presumption that private ownership necessarily produces greater operational efficiency.
The fourth chapter extends the analysis to the COVID-19 pandemic. Despite the economic collapse of 2020, the region’s banks continued to generate substantial profits, amounting to approximately US$42 billion before taxation. The contrast between banking profitability and the deterioration of employment, income and public finances provides a particularly compelling illustration of the distributional asymmetries explored throughout the book. The authors attribute this resilience partly to state interventions that preserved liquidity and financial stability, raising questions about the distribution of the benefits of public support.
The final chapter turns to fintech companies and digital banking. Although these institutions still represented a relatively small proportion of total banking assets at the time of writing, their rapid expansion indicated a potentially significant transformation of financial intermediation (a prediction that is probed right today). The authors are appropriately sceptical of claims that technological innovation will necessarily democratise finance. They show how emerging digital banks and payment platforms are themselves increasingly integrated into international financial networks, suggesting that digitalisation may reproduce, rather than overcome, existing patterns of concentration and accumulation.
The book’s principal contribution lies in bringing together comparative banking data and a political-economic interpretation of financial profitability. Its insistence that banking should be evaluated in relation to its contribution to productive development, rather than exclusively through shareholder returns, is a healthy reminder. Equally important is underlining that the structure of financial systems reflects political and institutional decisions, rather than merely the outcome of impersonal market forces.
There are a few areas where the book could have been stronger. First, the relationship between the empirical evidence and the book’s theoretical claims is not always fully established. The authors sometimes move from documenting extraordinary profitability to characterising these (loosely following Mazzucato’s The value of everything) as rents extracted from the wider economy. At points, however, the analysis appears to conflate financial appropriation, interest as a share of profits accruing to lenders of capital, ordinary profit and monopoly rent. The point becomes relevant as high returns alone do not account for the mechanisms through which they were obtained. The book considers alternative explanations, including macroeconomic conditions, risk and operational costs, but a more systematic assessment of their relative importance would have strengthened its central argument.
Relatedly, the authors acknowledge the limitations of their reliance on accounting data reported by financial institutions. Although these data allow them to distinguish between different sources of banking income, off-balance-sheet activities, including derivatives, complicate the interpretation of conventional profitability indicators. More fundamentally, the reliance on accounting information makes it difficult to establish the precise mechanisms through which extraordinary profits are generated, and particularly to distinguish ordinary financial returns from monopoly rents and other forms of appropriation.
The book’s historical framing is to an extent overambitious. Drawing on the history of colonial extraction, particularly the Haitian Revolution, the authors locate contemporary financial rents within a longer trajectory of external appropriation and unequal development. The analogy is provocative, but some historical connections are sometimes more rhetorical than analytical.
These limitations do not diminish the importance of the questions the book raises. Its concluding proposals – strengthening public and development banking, taxing extraordinary profits, expanding financial regulation and redirecting credit towards productive investment – follow from a consistent concern with the democratic governance of finance. While the feasibility of these policies varies considerably across national contexts, and the subjects of these are to be found, they underline the book’s most significant political insight: financial systems are neither neutral intermediaries nor institutions whose developmental contribution can be inferred from their profitability.
Ultimately, A mão visível do banqueiro invisível is a much-needed contribution to the political economy of Latin America. Its empirical findings provide a useful foundation for further comparative research. By placing the distributional consequences and political organisation of banking at the centre of the analysis, Oglietti and Páez make a compelling case for reconsidering the relationship between financial accumulation, economic development and democratic power in the region.
