beyondbrics

Far from the wreckage of European economies, Colombian banks are having a heyday.

The latest to shop abroad is Davivienda, the country’s third-biggest lender by assets, which has picked up HSBC’s Central American assets for $801m.

Efrain Forero, Davivienda’s chief executive, told reporters on Tuesday the deal added 136 branches in Costa Rica, El Salvador and Honduras, with assets of $4.3bn and loans of $2.5bn. 

Davivienda, owned by Grupo Bolivar, will pay cash for the deal, which represents about 20 per cent of its total assets.

Davivienda is following the lead of Colombia’s biggest bank, Bancolombia, which first ventured into Central America in 2007 with the purchase of El Salvador’s Banco Agricola. Bancolombia’s parent company Grupo Sura is currently finalizing its $3.9bn purchase last year of ING Group’s Latin American pensions and insurance assets; and Grupo Aval, which dipped a toe into Central America in 2010 with the $1.9bn purchase of BAC-Credomatic from General Electric.

Forero said Davivienda would seek a listing in New York within the year.

Even as Colombian banks are aggressively eyeing expansion opportunities, foreign banks such as Brazil’s Itaú-Unibanco and Banco do Brasil and CorpBanca of Chile have been clamouring to enter the Colombian market, although some have baulked at the perceived over-pricing of banking assets.

Foreigners are being drawn by the potential of Colombia’s still-low consumer penetration, prudent regulation and booming oil and mining sectors.

CorpBanca snapped up Santander’s Colombian assets for $950m in December, and sold a 3 per cent stake to Colombia’s Grupo Santo Domingo.

Canada’s Scotiabank has also bought a majority stake in Colombia’s Colpatria, Chile’s Banco Falabella and Ecuador’s Banco Pichincha began operations last year, and Peru’s Banco de Credito added a 51 per cent stake in Colombian broker Correval to its portfolio.

Latin Trade Magazine last year singled out Colombia, along with Peru and the region’s dominant force Brazil, in its Top 100 Banks list as having a “tremendous increase in credit”.

“Colombia accounts for nine of the top 100 banks in Latin America, and their combined assets reached $105 billion in 2010. On average they increased their assets by 30.9 percent [in 2010],” it said.

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