Latin Businesses See Booming Miami

(Reprint from The Miami News, October 5, 1981, by Merwin Sigale)

Undaunted by Miami's image as a crime-ridden city, attracted by high U.S. interest rates, and pushed in some cases by fear of political or economic instability in their own countries, Latin Americans are flocking to South Florida—and they're bringing huge sums of money with them.

Not simply more refugees or tourists or condominium buyers, their numbers include businessmen who want to buy our banks, build our office buildings, turn our vacant real estate into money-making properties.

Some of the wealthiest individuals and some of the biggest businesses in Latin America are eyeing Dade County as if it were El Dorado, the legendary city of gold. And in their enthusiasm, they often sound like civic boosters on the payroll of the Greater Miami Chamber of Commerce.

Says Gustavo Cisneros, one of Venezuela's business elite: "You can bet your bottom dollar that Miami-Coral Gables is going to become Hong Kong in 10 years ... I think Miami is going to be a boom town like you've never seen a boom town."

Cisneros is backing his words with money. So are other influential Latin Americans who are making or planning major investments in the Miami area.

Together, they are giving a broader dimension to Dade's established Latin American connection. It's more than the well-known tourism, trade and purchases of condominiums. It's a vote of confidence in Dade's future by some of Latin America's most prominent business leaders, families and financial groups.

Greater Miami's expanding Latin dimension came into focus through interviews in seven Latin American countries with dozens of business executives, bankers, lawyers, diplomates, journalists and others. The 32-day trip included Costa Rica, Panama, Venezuela, Colombia, Ecuador, Peru and Chile.

The interviews turned up scant concern in Latin America about Miami's negative image of crime, racial tension and refugees. Not one person among the dozens interviewed brought up the image question. But several, when asked about it, responded positively.

"That's the price you have to pay for becoming a center of people coming here and there," said José R. Fernandez, president of Colombia's $100-million-asset Banco Colpatria, which has just opened a Miami agency to handle foreign-trade financing. "It's a city that each day solidifies as a great city, with all of the good and bad that goes with being a great city."

In Caracas, prominent banker José Alvarez Stelling, who controls First National Bank of Greater Miami, said he sees Miami's refugee problem as transitory.

"I don't think that's a deep-rooted, serious social problem," he said. "There are not so many (refugees) and with time, that problem will be solved. Some refugees will be incorporated into society. Others will e sent somewhere else. It's a temporary setback."

Miami's reputation for crime didn't faze Victor Mendez, a 51-year old Bogotá taxi driver. "Everyone talks about how marvelous Miami is," said Mendez. "We're accustomed here to worse things. We have kidnappings, robberies, drug addicts."

The interviews were not numerous enough to represent  scientific sample, nor did they cover all Latin American countries. But they did establish that a number of prominent Latin Americans are bullish on Miami despite this community's concern about crime and about racial and ethic strains.

Banking is a hot item. About a dozen of Dade's 64 commercial banks already are owned by Latins (other than Cuban-Americans). The trend began in 1978, and it seems to be accelerating.

It's not to be confused with the growing presence of foreign banks that operate in Miami as agencies or as Edge Act institutions—limited in both cases to foreign-trade financing. About a dozen of the more than 50 banks of those types in Date County are from Latin America, and several more say they plan to move into Miami.

Where the competition gets hot is in the bidding for control of full-service domestic banks, which can tap the local deposit and loan market as well as seek a share of the international business coming to Miami.

In interviews, at least half a dozen Latin American investors or groups said they are looking for Miami-area banks to buy. Another—banker José Alvarez Sterling—said in Caracas that he intends to expand his Florida bank holdings and put up a high-rise office building on Brickell Avenue.

Gustavo Cisneros said in Caracas that he'd like to buy a minority interest in a Miami bank. He's also looking for a Coral Gables site on which to erect an office building.

Three separate banking interests in Guayaquil, Ecuador, said they are interested in acquiring Miami-area banks. One is Nahim A. Isaías, who heads Filanbanco, Ecuador's third-largest bank, and who also controls Republic National Bank of Miami.

"I want to buy another bank in Miami," said Isaías. "I think it's going to be very profitable. The dollar is getting stronger. Mr. Reagan is taking back the management of the country."

Ecuador's biggest bank, Banco del Pacífico, has been pondering whether to set up an Edge Act bank in Miami or buy a domestic bank in Dade or Broward County. "We know there are about two banks available—small capital, about $3 million to $4 million," said Leonardo Stagg, manager of the International division.

Then there's Banco Continental, the seventh-largest Ecuadorian bank, which is looking into a possible joint investment in a Miami bank with a Florida group. "I would say a great majority of the (Continental) bank's corporate clients have connections with Miami," said Leonidas Ortega, the general manager. "The majority of our foreign trade passes through Miami."

Peru's fifth-largest bank, Banco Regional Sur Medio y Callao, also is in the market for a Miami bank, according to its general manager, Fernando Lazo. He said he has talked with one Miami bank, but he declined to identify it.

Panamanian investors with business ties to Miami own a major interest in Watsco Inc., a Hialeah-based manufacturer, which this year bought eight per cent of the shares of Florida Commercial Banks Inc. That makes Watsco the largest single stockholder in the six-bank holding company.

One of Colombia's biggest industrial combines, the Santo Domingo Group, has been trying to buy a Miami bank through its bank subsidiary in Panama, Banque Anval. Michael Phair, president of Banque Anval, said in Panama City that the search was "toned down," though not abandoned, after he saw in the price tags on the five or six banks he looked at.

"We wanted a presence on Flagler Street, and we wanted a presence on Brickell for the opening of an international division," said Phair, who is Canadian. Although he hadn't found a bank, he did find a house in Dade County that he's buying as an investment.

In Santiago, Chile, the owner and president of Banco Nacional, Francisco Javier Errázuriz, said he's talking with several other Chilean banks about making a joint investment in a Florida bank. He was interested in the Florida National Banks chain—but that was before Southeast Banking Corp. approached Florida National about a merger.

Errázuriz also said he might open a commercial office in Miami next year to represent his extensive business interests, which include fruit and cattle exports, lumber, agriculture and paper manufacturing.

The interest in Miami banks appears to reflect an optimism about the long-term prospects for the South Florida economy. But Latin Americans continue to invest here in other ways, too: They are active in commercial real estate. They are buying condominiums and houses. They are funneling large sums into Miami bank accounts. They are shopping, though apparently less than last year. Colombians and others are setting up export-import companies in Miami.

Judging by announcements of business deals in Miami, much of the action is coming from Panama and from Curacao in the Netherlands Antilles. But that's misleading. Although some Panamanians are investing in Miami, corporations in Panama and Curacao often are perfectly legal fronts for unidentified investors in other countries.

Huge sums are coming from Latin America as flight capital—fleeing political or economic instability, or the simple fear of such instability. The United States is perceived as a safe and stable haven, and Miami is the U.S. city closest to most of Latin America in geography, culture, language and climate.

Other reasons stand out, too, many Latin Americans say: Good profit opportunities in the expanding South Florida market. The lure of high U.S. interest rates. A desire to diversify holdings. And the opportunity for Latin to do business where they also like to vacation and shop.

"About 80 per cent of the money coming out of Central and South America is coming into Florida," said Carlos J. Arboleya, vice chairman of Barnett Bank of South Florida.

Southeast First National Bank of Miami has the biggest chunk of foreign deposits in South Florida—more than $800 million. That figure was one-third of Southeast's total deposits at the end of 1980. J. Antonio Villamil, vice president and international economist, said that "80 per cent and up" is from Latin America.

Of the foreign deposits, 19 per cent came from Venezuela, 12 per cent from Guatemala and 11 per cent from El Salvador; no other country accounted for more than 10 per cent, the bank reported. Both Guatemala and El Salvador have been hit by political violence, and many uneasy residents have been getting their money out.

This year, economic problems in Costa Rica have led to some capital flight. "A lot of money is going out of here and buying condominiums in Miami," a foreign diplomat in San Jose said. Some of Costa Rica's wealthiest businessmen and lawyers have apartments in Miami.

For some Costa Ricans, getting money out is simply a matter of not bringing it in. Guido Fernandez, a prominent journalist and former economic counselor at Costa Rica's Washington embassy, said exporters being paid in other countries are leaving some of the funds abroad.

Miami also saw a surge of money from Ecuador this year. It stemmed largely from uncertainty over a border conflict with Peru, business dissatisfaction with government policies and the death of Ecuador's president in May. Some of the money went back. But banker Isaías said $100 million left Ecuador in June and July.

"Ninety million went to Miami and the rest to other countries," he said. "Those are lost deposits. We lost $20 million in my bank." He estimated that 65 to 70 per cent of the money was deposited abroad and the remainder used for purchases.

"Anybody in Guayaquil who can afford a condominium in Miami has one—and maybe another one besides to rent," said a foreign diplomat in Ecuador.

Money isn't the only thing traveling. Latin Americans are coming to Miami as tourists in ever-greater numbers, although the rate of increase has slowed this year. The Latin and European influx is helping to cushion a sharp decline in domestic tourism, though not off-setting it completely.

Figures compiles by Arthur Ellick, Dade's director of tourism research, show one million visitors last year from Latin America.