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Colombian banks: the shopping spree continues

Tuesday, February 26, 2013

The $2.1 billion acquisition earlier this month by Bancolombia of HSBC Panama, marks a little more than five years, since Colombian banks launched their conquest of Central American markets.

The move comes only a few months after Davivienda, part of Bogota-based Bolivar Corporate Group, paid $900 million for HSBC's operations in Costa Rica, El Salvador and Honduras.

Previously, Grupo Aval, which includes Banco de Bogotá, acquired BAC Credomatic for $1.9 billion, while Bancolombia bought El Salvador's Banco Agrícola.

Those transactions took place in 2010 and 2007, respectively.

The impact of these acquisitions has been significant.

In El Salvador, for example, Colombian financial institutions represent more than half of the value of the banking sector.

There are three main reasons for the success of Colombian bankers in the region.

One is the skill and experience of the Colombian business class, which went largely unnoticed during the years when the country's civil war dominated the news.

Second, Colombian banks face less competition from Spanish banks, whose Latin American ambitions are affected by the crisis in their domestic market.

Third, the foreign exchange policies of Colombia's central bank have made it much cheaper for the nation's banks to buy assets outside the country.

Colombian banks may not be done yet with acquisitions in the region, as well as in South America.

Colombia's financial institutions can see the weakness of the economies of Europe and the United States, the president of Bancolombia, Carlos Raúl Yepes, recently said. By contrast, Colombia is healthier.