Finance

Fortune Favors the Brave

Bank Expansion Abroad

With 40 million potential customers and several FTAs, it is easy to see why Colombian banks are looking to the wider region. Ironically enough, one of the factors that has […]

With 40 million potential customers and several FTAs, it is easy to see why Colombian banks are looking to the wider region. Ironically enough, one of the factors that has helped propel this expansion is Colombia’s expat community. Every year, approximately $9 billion flows into Colombia’s banking coffers in remittances from residents in the US. Such a balance sheet has provided a healthy cushion for regional expansion projects.

The first national bank that made the jump was Bancolombia, which opened an office in Panama in 1973. The Antioquian giant became the first Colombian company to list on the New York Stock Exchange (NYSE). Bancolombia went public in Wall Street in 1995, and its price has increased significantly over the last 30 years, surging from its $14.5 IPO to $70 in early 2013. In 2016, the stock has skyrocketed and gained nearly 40% in Q1.

Bancolombia then acquired Banco Agricola in 2007, one of the most important banks in El Salvador, paying $791 million for 100% of the company. Today, Banco Agricola has the largest client portfolio in El Salvador and recently became the first bank in the country to issue $300 million in bonds to the international market. Next, Bancolombia acquired 40% of BAM Guatemala in 2012 for $217 million and a large chunk of the firm Banistmo in Panama in 2013. After taking over the two strong and solid companies, the bank consolidated its position and has been performing well.

Bancolombia is not the only Colombian bank that has successfully ventured into other markets. Six years ago Grupo Aval also decided that Central America was fertile soil. In an interview with Colombian magazine Dinero, the Vice President for financial planning and IRO for Grupo Aval, Tatiana Uribe Benninghoff, explained how “cultural affinities“ and the fact that both regions speak the same language were key factors in the decision-making process. “At that time, we realized that Central America presented an interesting opportunity to diversify risks and an interesting alternative of sustainable and profitable growth,“ said Benninghoff.
In 2010, Grupo Aval acquired BAC Credomatic, a Nicaraguan group regarded as one of the largest financial conglomerates in Central America. Aval purchased a big chunk of the group for roughly $2 billion and in the last five years Credomatic has more than doubled its assets from $8 billion to $18 billion since then.

In June 2015, Aval’s net worth in Central America rose to $2.4 billion. The company employs 23,000 people across seven countries through 2,400 points of sale and attends to about 3 million customers. Grupo Aval still sees opportunities for growth in markets, particularly Peru, Chile, and Mexico. The company, which is headed by the Sarmiento family, one of the richest in the world, has made it clear that all three are appealing options, although no acquisitions have been announced yet.

The latest Colombian financial newcomer to Central America was Davivienda bank, which belongs to the holding Sociedades Bolivar. In 2012, Davivienda acquired the operations of HSBC in Costa Rica, Honduras, and El Salvador. To date, the firm has nearly 810,000 customers outside Colombia and in Central America its portfolio nears $4.2 billion and gross profits in the region reached $60.1 million in 2014. In Honduras as well as Costa Rica and El Salvador, the bank is among the top market players. If current growth patterns continue, it looks like more Colombian giants will be stepping beyond their borders.

You may also be interested in...

09f04421-d1a5-4dc5-abe5-510b3b2b50bb

Telecoms & IT

Colombia’s IT and telecoms sector and the role of digitalization

IT and telcoms and the digital transformation in Colombia

View More
Well,For,Oil,Extraction,Colombia

Energy & Mining

The Next Step

Colombia's oil and gas industry

View More
14b5a81d-4304-489f-8d88-306928c5730c

Finance

Sound Advice

Managing risk properly

View More
Solar,Panel,Produces,Green,,Environmentaly,Friendly,Energy,From,The,Setting

Green Economy

The Green Wire

Colombia's green economy

View More
d073325a-01d3-4519-a09f-afa5d135cbd8

Economy

A Guiding Hand

The evolving role of the consultant

View More
Team,Job.,Photo,Young,Businessmans,Crew,Working,With,New,Startup

Economy

Accounting

The changing face of auditing in Colombia

View More

Real Estate & Construction

Real Estate Investment in Colombia

Opportunities in an Emerging Market

View More
Credit: Shutterstock / Yhaira Rincon

Diplomacy

Elections in Colombia

Is a trend toward left-wing governance emerging in Latin America?

View More
Toward a Renewable Future

Energy & Mining

Toward a Renewable Future

Diversification

View More
Let’s Get Thinking

Tourism

Let’s Get Thinking

Creative Content in Colombia

View More
View All Articles