LatinFinance - September/October 2013 - 78

Stretching out
the expansion also brings financial risks, as
the purchasers borrow to fund the deals.
moody’s put Bancolombia’s Baa2 rating
on review for downgrade after it announced
the HSBc Panamá acquisition.
Under the terms of the takeover,
Bancolombia will get 100% of common
shares and 90.1% of preferred shares of
HSBc Panamá. the deal includes the latter’s
brokerage, fiduciary services unit and
insurance company, but not its colombian
units.
the deal will make Bancolombia the
second-largest player by loans and deposits
in the fast-growing market, and give it a
much-coveted banking license.
moody’s noted, however, that
Bancolombia’s capital, liquidity, and
profitability were likely to come under
pressure as a result of the purchase.
the price is around three times the new
subsidiary’s net asset value, and 16 to 17
times earnings.
the relative size of the deal also makes it
particularly risky in the eyes of the ratings
agency: HSBc Panamá’s $8 billion in assets
represents 20% of Bancolombia’s balance
sheet and 120% of its equity base.
Shortly after the ratings action,
Bancolombia shareholders approved
a platform to sell up to $2.4 billion in

78 l atinfina nce.com - September/October 2013

YEPES: Central America’s economies do not
present a single set of risks

preferred shares. Yepes notes, however,
that the lender has no immediate intention
of accessing either the equity or debt capital
markets.
“Grupo Bancolombia does not plan to
issue shares this year,” he says. “nor is a
bond sale planned this year. in the future,
particularly next year, we might think about
issuing capital, but not in 2013.”
Bancolombia has also agreed to pay
$216 million for a 40% stake in the Panama-

©REUTERS

attention.
the Superintendencia financiera
de colombia (Sfc) this year reinstated
a practice, dormant since 2010, of
international site visits. executives have
already visited costa Rica and el Salvador
to conduct on-site inspections at Bac
credomatic and Bancolombia subsidiary
Banco agrícola.
the regulator has good reason to take the
changes seriously. a trend for colombia’s
banks to move into a single region creates
concentration risk, in addition to the risks
specific to each individual market.
“Some things are risks in Guatemala,
others are risks in el Salvador, and others
are risks in Panama,” says carlos Raúl
Yepes, chief executive of Bancolombia.
“there isn’t a single set of risks.”
countries across the region do, however,
have some macroeconomic risks in
common. “there is one risk in central
american economies, particularly in
Guatemala, and that is the dependence on
foreign economies, mainly remittances
from the US,” says Yepes. “Depending on
how those flows evolve, that can be a risk.”

Carlos raúl Yepes, BanColomBia

“You can’t come to
think that what
worked well in
one place for an
acquisition will
work equallY well
elsewhere”

based holding company that owns Banco
agromercantil, a Guatemalan lender with
$2.23 billion in assets. the agreement gives
Bancolombia the possibility to increase the
minority stake in the holdco to a controlling
one in the medium term.
Similarly, moody’s changed the outlook
on Banco Davivienda’s rating to negative
after the lender announced its first major
cross-border investment in January 2012.
Davivienda bought HSBc’s retail,
corporate and insurance operations in
costa Rica, el Salvador and Honduras
for $801 million, in an all-cash deal. the
businesses, which came with 136 branches,
had around $4.3 billion in assets — close to a
quarter of Davivienda’s own asset base.
that raised a flag for moody’s, as did the
fact that Davivienda was exposing itself to
credit, market and foreign exchange risk
that could be negative for liquidity and
profitability.
the rating agency has since, however, got
http://www.LATINFINANCE.COM
LatinFinance - September/October 2013

Table of Contents for the Digital Edition of LatinFinance - September/October 2013
