Latin Finance - November/December 2009 - 43

2009 rise to $7.9 billion from $7.6 billion in the same period, he explains. S&P believes that should Banco General’s non-performing assets increase, it would still have enough capacity to absorb this. However, the bank does not expect a major increase, partly because the loan portfolio is expected to remain flat compared to last year, Alemán says, adding that demand for credit is weak. An issue that elicits some caution is the bank’s exposure to mortgage loans. S&P says it will continue to monitor the performance of the mortgage and real estate portfolios of Banco General closely because they represent the institution’s largest exposure. “The bank’s [BBB- counterparty credit rating with stable outlook] is constrained by the concentration of the bank in mortgage and construction loans, the use of shortterm deposits to fund long-term loans and stiff competition in the banking sector of Panama,” the ratings agency says. However, just the fact that the bank is located in Panama scores it extra points. S&P believes that in countries with dollarized currencies, such as Panama, the risk of sovereign interference is less than the risk of sovereign default. Fitch agrees. “Dollarization underpins an established track record of macroeconomic stability unrivaled by sub-investment grade emerging markets, as illustrated by an extended period of high growth in conjunction with low to moderate inflation,” Fitch says. Nevertheless, Alemán intends to keep liquidity high and says there are no plans for M&A for the near future. “We will continue to focus on fine-tuning our branch network in Panama and add some new branches, but we have no plans for acquisitions,” he says. LF Best Bank – Banco Agrícola El Salvador In Hands Less Foreign W hile Banco Agrícola now belongs to Bancolombia, its new owner is keeping a respectful distance when it comes to running things, and for good reason. In the past year, Banagrícola had beaten its local competitors, which are now all in foreign hands, handsomely on nearly all fronts. Of the three largest banks, it is the only one to have actually grown its asset base in the 12 months through June 2009, albeit at a meager 1%. “We have a lot of respect for the institution we have in El Salvador,” says Bancolombia CEO Jorge Londoño, noting that most of the executive team in place at the time of the acquisition has remained. Banagrícola’s ROE to June 30 of 11.23% is far superior to the 0.27% and -0.98% of HSBC and Citibank, respectively, according to data from El Salvador’s financial regulator. ROA of 1.30% is similarly higher than the close to zero returns of its two chief rivals. And while NPLs for Banagrícola stood at 2.24%, Citi and HSBC posted ratios of 4.45% and 5.66%, respectively, at the end of the first half. Londoño points to regulator statistics that show Banagrícola’s share of the financial sector’s net income soared in the past year, accounting for 83.74% of the total pie in June 2009, compared to 36.42% in March 2007. “We’ve made good progress, and we’ve managed to operate profitably,” says the CEO, who notes that El Salvador has been hit particularly hard by the external financial crisis. During the integration, which has been ongoing since the acquisition in 2007, Londoño says his Medellin-based management team has been trying to pass on some of the management culture of his bank. They also want Banagrícola officials to continue running the business as they did when independent. “Some of the fundamental pillars of our management culture include empowering the administrative team, and having a very transparent relationship between different managers of the company,” says Londoño. “We are encouraging all of the bank’s employees to apply their creativity and intelligence [to improving the bank,]” he adds. LF Best Bank – Banco de Costa Rica Costa Rica osta Rica’s government backed banks have played an important role in supporting the country’s economy, and continue to dominate at a time when private financial institutions and foreign operations may find it difficult to enter or increase share. Banco Nacional de Costa Rica (BNCR) remains the largest, with $5.56 billion in assets as of June, ahead of Banco de Costa Rica’s (BCR) $3.75 billion. During the downturn, however, return on equity (ROE) at the larger bank sunk to 13.2% from 18.3% the year before, while BCR’s managed to rise slightly to 14.06% from 12.28%. BCR’s ROA was up to 2.22% in June, from 1.95% the year before. Total assets increased to the June levels from $3.53 billion the year before. “As a state-backed bank we have played a very decisive and important role in trying to inject credit and more liquidity through remote activity,” says Mario Rivera, general manager at BCR. He says the banking sector has had to restrict lending after first feeling the effects of the global credit crisis late last year. This year will not see asset growth as high as in other years, but he explains it should be sufficient to maintain the financial solvency and market participation level of his bank. BCR has 18% of the system’s assets and 20% of deposits. “There are small signs of improvement in the economy, but Costa Rica will have to wait until the [December-April] tourist season to see if activity in that important sector picks up,” he says. If it does, other areas of the economy should start to show signs of life, even if 2010 is not a year of sharp improvement. BCR remains focused on credit growth, Rivera says, fundamentally to help the main sectors of the country, particularly residential. It also aims to increase credit to retail clients, which is a smaller portion of total lending than commercial banking. As for the competitive landscape in Costa Rica, the credit crisis should help Sweet Insulation C November/December 2009 LatinFinance 43

Latin Finance - November/December 2009

Table of Contents for the Digital Edition of Latin Finance - November/December 2009

Latin Finance - November/December 2009
Contents
Latam-China Flows
Petrobras Interview
Best Boutiques
Banks of the Year 2009
Itau Unibanco Interview
Mexico: How to Capitalize on Crisis
Colombia: Local Shop Repels Foreign Pretenders
Chile: Pefecting the Art of Retail
El Salvador: A Foreign-owned Bank Dominates
Infrastructure & Energy Awards
Private Equity Fundraising
Latin Finance - November/December 2009 - Latin Finance - November/December 2009
Latin Finance - November/December 2009 - Cover2
Latin Finance - November/December 2009 - Contents
Latin Finance - November/December 2009 - 2
Latin Finance - November/December 2009 - 3
Latin Finance - November/December 2009 - 4
Latin Finance - November/December 2009 - 5
Latin Finance - November/December 2009 - 6
Latin Finance - November/December 2009 - 7
Latin Finance - November/December 2009 - 8
Latin Finance - November/December 2009 - 9
Latin Finance - November/December 2009 - 10
Latin Finance - November/December 2009 - 11
Latin Finance - November/December 2009 - 12
Latin Finance - November/December 2009 - 13
Latin Finance - November/December 2009 - 14
Latin Finance - November/December 2009 - 15
Latin Finance - November/December 2009 - 16
Latin Finance - November/December 2009 - 17
Latin Finance - November/December 2009 - Latam-China Flows
Latin Finance - November/December 2009 - 19
Latin Finance - November/December 2009 - 20
Latin Finance - November/December 2009 - 21
Latin Finance - November/December 2009 - 22
Latin Finance - November/December 2009 - 23
Latin Finance - November/December 2009 - Petrobras Interview
Latin Finance - November/December 2009 - 25
Latin Finance - November/December 2009 - 26
Latin Finance - November/December 2009 - 27
Latin Finance - November/December 2009 - Best Boutiques
Latin Finance - November/December 2009 - 29
Latin Finance - November/December 2009 - 30
Latin Finance - November/December 2009 - 31
Latin Finance - November/December 2009 - Banks of the Year 2009
Latin Finance - November/December 2009 - 33
Latin Finance - November/December 2009 - 34
Latin Finance - November/December 2009 - Mexico: How to Capitalize on Crisis
Latin Finance - November/December 2009 - 36
Latin Finance - November/December 2009 - 37
Latin Finance - November/December 2009 - 38
Latin Finance - November/December 2009 - Colombia: Local Shop Repels Foreign Pretenders
Latin Finance - November/December 2009 - Chile: Pefecting the Art of Retail
Latin Finance - November/December 2009 - 41
Latin Finance - November/December 2009 - 42
Latin Finance - November/December 2009 - El Salvador: A Foreign-owned Bank Dominates
Latin Finance - November/December 2009 - 44
Latin Finance - November/December 2009 - 45
Latin Finance - November/December 2009 - 46
Latin Finance - November/December 2009 - 47
Latin Finance - November/December 2009 - 48
Latin Finance - November/December 2009 - 49
Latin Finance - November/December 2009 - Infrastructure & Energy Awards
Latin Finance - November/December 2009 - 51
Latin Finance - November/December 2009 - 52
Latin Finance - November/December 2009 - 53
Latin Finance - November/December 2009 - 54
Latin Finance - November/December 2009 - Private Equity Fundraising
Latin Finance - November/December 2009 - 56
Latin Finance - November/December 2009 - Cover3
Latin Finance - November/December 2009 - Cover4
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