Latin Finance - April 2008 - 24

banco industrial Industrial Evolution by Greg Brosnan resh from buying a Honduran bank and on the verge of opening in El Salvador, Guatemala’s Banco Industrial continues to push into still relatively virgin Central American retail banking territory. Guatemala’s largest bank also hopes to be the first to forge a path north, with plans to expand into southern Mexico. Industrial was expected to make a splash with an equity listing in Mexico early this year through Credit Suisse. But the bank’s international division manager Luis Prado tells LatinFinance that those plans are up in the air and investors may have to wait beyond 2008 for an IPO. “We have decided to list shares in our holding company on an international stock exchange but we still have not decided where or when,” he says. “We think it’s a good way to raise fresh capital and support our expansion plans and there are a lot of advantages to doing it, but we’re going to choose the right moment.” Equity markets were particularly hostile in the first quarter amid global volatility. Industrial’s holding company BI Capital – registered in Panama – has $6.4 billion in assets, $3.5 billion in loans, deposits of more than $5.0 billion and about $650 million in capital. According to Prado, it has about 30% market share in Guatemala. The country’s banking superintendent lists G&T Continental and partly state-owned Banrural in third place as its closest competitors in terms of assets. F Guatemala’s dominant financial institution, Banco Industrial, awaits a window to raise equity capital to feed regional expansion. The increasingly attractive target says it is not for sale. Guatemala’s Banco del Quetzal in February. Industrial has applied for a banking license in El Salvador and hopes to open branches bearing its name there as early as mid-year. Prado says the acquisition spree began in part as a defensive move. Industrial aimed to attain critical mass before major international banks charged in to the extent that they have done in neighboring El Salvador. Scotiabank recently bought Guatemala’s Banco de Antigua from Chilean group Altas Cumbres and Citi already has a presence in Guatemala since buying Banco Uno and Banco Cuscatlán. HSBC is said to be on the lookout for a Guatemalan bank, and rumors swirled late last year that it was trying to buy Guatemala’s No.2 bank G&T Continental, while Scotia was said to be eying Industrial. Rapid expansion, as well as plans to go public, have led market-watchers to ponder whether Industrial’s directors are fattening the calf for a potential foreign buyer. However, Prado says that the bank is not for sale, adding that no suitor has approached him with an offer. “We want to be the leading bank in the region while continuing to be an independent, local capital bank – one that really understands our customers’ needs and knows the market,” he says. “In that regard, we think we have an advantage over any international bank that comes to town.” enormous potential for growth in the nation of 13 million inhabitants. It cites a credit to GDP ratio of just 25% and says there are opportunities to reach out to the large chunk of the rural population that has never used a financial institution. “It’s our natural market,” he says. “It’s the market we know and the place where we feel 100% comfortable doing business.” Industrial started life serving corporate clients, it has gradually shifted to retail. Five years ago, says Prado, 90% of the loan portfolio was corporate, with the rest retail. The latter now makes up about a quarter of all credit and is split more or less equally between mortgages, car loans, consumer loans and credit card debt, he says. The bank has 300,000 credit cards in circulation in Guatemala and hopes to issue many more this year. In Honduras and El Salvador, the emphasis will remain on retail. Prado says Industrial hopes to tap further into the massive pool of potential customers who rely on remittances from abroad, using new products to entice them to save and borrow. “There is still a lot to be done in the retail sector,” he says. “Anything to do with consumer finance is practically a virgin market for us.” The bank has not yet applied for a license to operate in southern Mexico, but it believes the region has more in common with Central America than the rest of the country. And Prado is undaunted by the presence of some of the world’s biggest institutions in an already crowded market. “These banks don’t have a very prominent presence in the south,” he says. “They’ve totally ignored that region and that’s why we see a big opportunity.” LF Buy or be Bought Industrial’s expansion drive kicked off in 2006 when it purchased Guatemala’s Banco del Occidente. Early last year it snapped up failed Banco del Comercio from Guatemalan receivers. It bought Honduras’ Banco del Pais in December and finally sealed a deal to acquire Almost Virgin Markets Prado says most of Industrial’s energy will be devoted to Guatemala. The bank sees 24 LATINFINANCE March 2008

Latin Finance - April 2008

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