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Bancolombia, Banco de Bogotá eye market opportunities, say CEOs

Sep 26, 2013

Amid an acquisition spree, Colombian banks consider debt, equity, and further M&A

Two of Colombia's largest lenders have capital market moves in their sights, although they will bide their time ahead of execution, their chief executives told LatinFinance.

Bancolombia is considering tapping capital markets in 2014, chief executive Carlos Raúl Yepes told LatinFinance in the September/October edition of the magazine. But the bank, which agreed to buy HSBC's assets in Panama for $2.1 billion earlier this year, would not tap debt or equity markets sooner than that, he said.

"Grupo Bancolombia does not plan to issue shares this year," Yepes said. "Nor is a bond sale planned this year. We do think that in the future, particularly next year, we might think about issuing capital. But not in 2013."

Bancolombia's HSBC Panamá acquisition was the largest of a series of purchases by Colombian lenders into Central America in the past 18 months.

Most recently, Banco de Bogotá bought two Central American units. It plans to sell $500 million in equity before the end of the year, to support the acquisition of BBVA Panamá, it said Wednesday. The transaction remains to be approved by the bank's board.

Banco de Bogotá, which is owned by Grupo Aval, would look at further opportunities that appear, the bank's chief executive told LatinFinance in the September/October edition of the magazine, ahead of Wednesday's equity raise announcement.

"When an acquisition opportunity appears for sale, we analyze it," Alejandro Figueroa said. "And if we think it's a good investment, we will go ahead. But at the moment we have nothing in sight."

The expansion of Colombia's banks has been rapid. Five years ago, they had 42 subsidiaries and around $11.2 billion worth of assets outside the country. Today, they have 162 international subsidiaries, worth around $41.1 billion.

In June, Colombia's regulator approved GNB Sudameris' purchase of HSBC assets in Paraguay, Peru and Uruguay, totaling around $3.5 billion.

If the recent deals from Bancolombia and Banco de Bogotá also go through as planned, Colombian lenders will have as much as 22.8% of their assets offshore. In March, that number was just 15.6%.

This overseas expansion has not been driven by a lack of opportunities in their home market, where a strong economy and still low banking penetration continue to offer good growth potential.

Rather, the combination of increasing trade ties between Colombia and Central America, and the retreat of European banks from the region, proved too good to pass up.

"Despite a strong home market, Colombia's banks have decided to grow into natural regions for expansion," said Diego Usme, analyst at Ultrabursátiles, a brokerage in Bogota. LF

See full comments from Yepes and Figueroa in " Colombian bank M&A: Foreign affairs", in the September/October edition of LatinFinance



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