LatinFinance - September/October 2013 - 80

agreement to buy BBVa Panamá, which has
assets of around $2 billion. Banco de Bogotá
is paying $490 million cash, a $140 million
dividend from the Panamanian unit, and
a $16 million adjustment for earnings
between June 1 and november 30, when the
deal is expected to close.
Grupo aval has said it will support
the purchase with a $500 million equity
injection into Banco de Bogotá.
the deal came a month after Banco de
Bogotá announced the purchase of another
central american lender. through Bac
credomatic, it paid $411 million for Grupo
financiero Reformador, a Guatemalan
lender with $2.8 billion in assets.
Broader base
Part of the reason for the relentless pace
of expansion can be found in the fact that
colombia and central america operate
on different economic cycles. While
colombian growth depends to a large
extent on oil production, much of central
america is tied economically to the US.
“if the oil price fell, colombia would
trend toward a slowdown and so would the
loan portfolios,” nicolas noreña, equity
analyst at Serfinco in Bogota, says.
“But that would be partially compensated for the banks because central america
has completely the opposite behavior:
cheaper energy means more productive
industries.”
the highly dollarized nature of central
american economies helps mitigate
concerns around domestic exchange rate
fluctuations. the colombian peso has lost
more than 10% of its value against the dollar
since January and is expected to remain in
the current range of 1,900 to 1,950 for the
foreseeable future, according to Yepes.
“We’re not going to return to seeing
levels of 1,750 or 1,800 pesos to the dollar,”
he says.
for the regulator, the changing shape of
colombia’s banks calls for a more advanced
approach to managing the sector. already,
the Sfc has won praise from analysts for
looking at the banks on a consolidated
basis.
“Under colombian regulation, banks all
have to report their financial statements on
a consolidated basis,” says noreña. “that’s
very good in regulatory terms.
“even if, in a hypothetical case, a central
american regulator was more relaxed with
its rules, when the colombian bank reports
at home, it would have to incorporate the
costs of homogenizing the balance sheet.”

80 l atinfina nce.com - September/October 2013

Central American focus
Assets owned by subsidiaries of Colombian
banks internationally
Country

Assets ($m)

% of total

Panama

13,729

33.40%

El Salvador

7,834

19.10%

Costa Rica

4,643

11.30%

Honduras

3,376

8.20%

Virgin Islands

3,025

7.40%

Chile

1,846

4.50%

Peru

1,719

4.20%

Cayman Islands

1,273

3.10%

Nicaragua

1,125

2.70%

Mexico

1,121

2.70%

Guatemala

729

1.80%

Puerto Rico

332

0.80%

Barbados

179

0.40%

Dominican
Republic

75

0.20%

Bahamas

67

0.20%

Uruguay

25

0.10%

US
Total
Colombia’s banks
have 162 international units with
assets of $41 billion,
according to the
regulator. In 2006,
they had 29 foreign
subsidiaries, with
$3.9 billion of
assets. Alejandro
Figueroa, Banco
de Bogotá’s chief
executive, says
Colombia’s bank

15

0.00%

41,112

100.00%

acquisitions are
a logical move:
“We’ve expanded
towards Central
America, which is
a natural region for
us — because of its
tradition, language,
and for the trade
between Colombia
and the region and
the growth of
business links.”

Yet in a recent presentation, the Sfc
noted there was still much to be done.
it pointed to the need for prudential
requirements to stipulate the way risks
at individual entities are accounted for in
consolidated financial results. Similarly, a
protocol for sharing information between
regulators is important.
Jeanne Del casino, senior credit officer
at moody’s notes, however, that most
financial supervisors in central america
are already making good progress with
the implementation of global regulatory
standards.
“most of the countries’ regulators are
focused on Basel ii/Basel iii concepts,
pushing to update banking regulations
regarding capital and risk provisioning in
particular according to their own schedules
and legal and industry frameworks,” she
says.
Real diversification
overall, analysts are positive on the expansion of colombia’s banks. Diversification
— not just geographical, but also economic
— is favorable. and, with the US slowly
beginning to grow again, central america’s
economies are expected to improve.
“of course, the banks can make
mistakes,” says Del casino. “they could buy
something for too high a price and not be
able to make it work.
“But central america has been doing
very well. the economies are the strongest
they’ve ever been. the rule of law has
improved, the business climate has
improved, and there’s a lot of investment
coming in, not just from colombia, but also
from the US, europe and Venezuela.”
Banco de Bogotá’s figueroa says the
acquisitions are strengthening colombia’s
financial system.
“central america is a natural region
for us,” he adds, “because of its tradition
and language, and for the trade between
colombia and the region, and the growth of
business links.”
Still, when it comes to incorporating
local subsidiaries, attention to local
specifics is critical, says Yepes.
for its new acquisition in Panama,
Bancolombia has decided to revert to
the bank’s original name, Banistmo. the
prestige of the brand in Panama makes it
worth reviving, says Yepes.
attention to such local details is critical,
he adds. “You can’t come to think that what
worked well in one place for an acquisition
will work equally well elsewhere.” LF


http://www.LATINFINANCE.COM

LatinFinance - September/October 2013

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

Latin Finance - September/October 2013
Contents
Front notes
People news
Debt news
Equity news
M&A news
After the storm
Advantage Mexico
Treading water
New structures
Mexico
Regaining the Initiative
Deficit Ahead
Building up
Switching Course
Brazil
Work in progress
Extreme makeover
Mind the gap
Brazilian life insurance
Andean
Breaking the fall
Reaching out
Market movers
Paraguay
Smoothing the cycles
Thinking big
Parting Shot
LatinFinance - September/October 2013 - Latin Finance - September/October 2013
LatinFinance - September/October 2013 - Cover2
LatinFinance - September/October 2013 - Contents
LatinFinance - September/October 2013 - 2
LatinFinance - September/October 2013 - 3
LatinFinance - September/October 2013 - Front notes
LatinFinance - September/October 2013 - 5
LatinFinance - September/October 2013 - People news
LatinFinance - September/October 2013 - 7
LatinFinance - September/October 2013 - Debt news
LatinFinance - September/October 2013 - 9
LatinFinance - September/October 2013 - Equity news
LatinFinance - September/October 2013 - 11
LatinFinance - September/October 2013 - M&A news
LatinFinance - September/October 2013 - 13
LatinFinance - September/October 2013 - 14
LatinFinance - September/October 2013 - 15
LatinFinance - September/October 2013 - 16
LatinFinance - September/October 2013 - 17
LatinFinance - September/October 2013 - 18
LatinFinance - September/October 2013 - 19
LatinFinance - September/October 2013 - 20
LatinFinance - September/October 2013 - 21
LatinFinance - September/October 2013 - 22
LatinFinance - September/October 2013 - 23
LatinFinance - September/October 2013 - After the storm
LatinFinance - September/October 2013 - 25
LatinFinance - September/October 2013 - Advantage Mexico
LatinFinance - September/October 2013 - 27
LatinFinance - September/October 2013 - Treading water
LatinFinance - September/October 2013 - 29
LatinFinance - September/October 2013 - 30
LatinFinance - September/October 2013 - New structures
LatinFinance - September/October 2013 - 32
LatinFinance - September/October 2013 - 33
LatinFinance - September/October 2013 - 34
LatinFinance - September/October 2013 - 35
LatinFinance - September/October 2013 - 36
LatinFinance - September/October 2013 - 37
LatinFinance - September/October 2013 - 38
LatinFinance - September/October 2013 - 39
LatinFinance - September/October 2013 - 40
LatinFinance - September/October 2013 - Mexico
LatinFinance - September/October 2013 - Regaining the Initiative
LatinFinance - September/October 2013 - 43
LatinFinance - September/October 2013 - Deficit Ahead
LatinFinance - September/October 2013 - 45
LatinFinance - September/October 2013 - Building up
LatinFinance - September/October 2013 - 47
LatinFinance - September/October 2013 - 48
LatinFinance - September/October 2013 - 49
LatinFinance - September/October 2013 - 50
LatinFinance - September/October 2013 - 51
LatinFinance - September/October 2013 - Switching Course
LatinFinance - September/October 2013 - 53
LatinFinance - September/October 2013 - 54
LatinFinance - September/October 2013 - 55
LatinFinance - September/October 2013 - 56
LatinFinance - September/October 2013 - Brazil
LatinFinance - September/October 2013 - Work in progress
LatinFinance - September/October 2013 - 59
LatinFinance - September/October 2013 - 60
LatinFinance - September/October 2013 - 61
LatinFinance - September/October 2013 - Extreme makeover
LatinFinance - September/October 2013 - 63
LatinFinance - September/October 2013 - 64
LatinFinance - September/October 2013 - 65
LatinFinance - September/October 2013 - 66
LatinFinance - September/October 2013 - Mind the gap
LatinFinance - September/October 2013 - 68
LatinFinance - September/October 2013 - 69
LatinFinance - September/October 2013 - Brazilian life insurance
LatinFinance - September/October 2013 - 71
LatinFinance - September/October 2013 - 72
LatinFinance - September/October 2013 - Andean
LatinFinance - September/October 2013 - Breaking the fall
LatinFinance - September/October 2013 - 75
LatinFinance - September/October 2013 - 76
LatinFinance - September/October 2013 - Reaching out
LatinFinance - September/October 2013 - 78
LatinFinance - September/October 2013 - 79
LatinFinance - September/October 2013 - 80
LatinFinance - September/October 2013 - 81
LatinFinance - September/October 2013 - Market movers
LatinFinance - September/October 2013 - Paraguay
LatinFinance - September/October 2013 - Smoothing the cycles
LatinFinance - September/October 2013 - 85
LatinFinance - September/October 2013 - Thinking big
LatinFinance - September/October 2013 - 87
LatinFinance - September/October 2013 - Parting Shot
LatinFinance - September/October 2013 - Cover3
LatinFinance - September/October 2013 - Cover4
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