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Álvaro Miguel Navas Patrón

COLOMBIA - Finance

Steady She Goes

President, Banco Agrario de Colombia


Álvaro Miguel Navas Patrón has a long history in academia and the public and private sectors. He has completed studies in international public law, constitutional law, and various specialized programs in France and Colombia. From 1994 to 2008 he served as lecturer at the Universidad Externado de Colombia, as Academic Coordinator at the Instituto de Altos Estudios Para El Desarrollo-IAED, and full-time lecturer on topics such as human rights, economic integration, and the EU at the University of the Andes in the mid-1990s. He has worked as an assessor for the Presidential Office for Human Rights, as well as numerous governmental bodies involved in improving Colombian society. His writings on relations between municipalities and the state have been published widely, and he is bilingual in Spanish and French.

"We see entering the mortgage segment as a way to take advantage of the extensive geographical presence of the bank in Colombia."

In May 2013, the 12 Colombian banks reported a profit of Ps2.49 trillion, while in the same period of 2012 that figure was Ps2.17 trillion. What’s the reason behind Colombia’s banking strength nowadays?

The Colombian banking system has a very efficient regulatory framework that has allowed the optimization of the bank’s role in society. Colombia suffered from a severe financial crisis in the late 1990s, which led to reforms in the regulatory organ of the financial system, bailing out many banks and establishing more efficient regulation. The country also improved the monitoring and supervision of financial institutions operating in the country and the market itself. Today, we have a very robust financial system in terms of the supervision and monitoring of banking activity. Additionally, the Colombian economy has been steadily growing for the last 12 years, and keeping in mind that Colombia has a very strong domestic market, the country is in a good position to overcome possible adverse economic situations. Besides, confidence in the country has increased significantly, and this has boosted both domestic and foreign investment. Therefore, the current situation of the banking system in Colombia is due to the efficiency and the favorable economic conditions the country enjoys.

How would you assess recent developments in Colombia’s agricultural sector?

Risks in rural Colombia are not only financial, but environmental and social, too. Even though we have significant problems in the countryside, I feel very optimistic about Colombia’s economic growth, particularly the development of agricultural sector. Colombia is a very diverse country when it comes to landscape and climate, which makes agricultural activity vulnerable to harsh weather conditions, a sector in which the Colombian economy is strongly focused on. Also, there are other international scenarios affecting our agriculture sector, such as the prices of commodities. However, the future, once the crisis is over, is brighter for the Colombian agricultural sector. We are heading to the most ambitious infrastructure plan ever in the country, which will be focused on the construction of roads, railways, and ports. This will make our country more competitive and agricultural production will be driven to the international market in a more efficient way.

“We see entering the mortgage segment as a way to take advantage of the extensive geographical presence of the bank in Colombia.”

What strategies has the banking sector implemented to boost banking penetration in remote areas of Colombia?

The country has over 70% of its population concentrated around urban areas, and 52% of these people live in either large or medium to large cities. Therefore, banking services and activities focus on these areas, where people tend to have regular and stable income, as well as a proven credit quality. In this context, rural Colombia has some of the worst social development indicators, such as increased poverty and low banking penetration. Banking intermediation costs are high and reaching these areas is, in many cases, not profitable at all for banks. However, there have been some policies to reduce these costs from the government. As per Banco Agrario de Colombia, we have 742 bank branches and 6,400 banking correspondents. We are a banking institution with a presence in areas where no other banks can be found, such as rural Colombia. We have 500 branches located in towns where there are no other banks. At the moment, we are working on a strategic plan with the Ministry of Telecommunications to boost banking penetration in remote areas of the country, while also increasing the availability of banking services to these communities. In our particular case, we have also developed specific products targeting rural Colombian citizens in addition to implementing a very aggressive banking penetration strategy in rural Colombia. Reducing costs and implementing very specific programs, such as credit cards with particular benefits for small farmers, are examples of those new products. Also, we are a very active player in the government’s subsidies plan and we have nearly 3.5 million clients who are part of this plan, something we complement by offering financial education and opening bank accounts for these people as part of the financial inclusion plan.

What other strategies do you have lined up to continue increasing banking penetration in Colombia?

We have a very ambitious plan to open 1 million Banagraritos accounts, in which we will bring banking services closer to children whilst teaching them the benefits of having a financial history in the future. We would like to boost the savings culture among children in rural areas, as they are the future of the country. We also want to develop a program for teenagers aged 18+ for them to access financial services, creating special conditions for them to access to their first credit.

What are the challenges ahead of the industry?

The banking sector in Colombia faces a technological challenge to migrate its current services to the digital world. Also, the sector needs to further expand and diversify its product portfolio, for this is a very demanding industry that increasingly requires tailor-made solutions. We believe the banking sector has to play a major role in driving the development of rural Colombia.

What is the future vision you have for Banco Agrario de Colombia?

Banco Agrario will play a major role in the post-conflict period in Colombia. The bank has a presence in 720 municipalities, and in over 500 of which we are the only financial institution operating. At the rural level, we are Colombia’s bank of choice, and we aim to strengthen our position with more branches and offices. We believe that rural Colombia, along with the agricultural sector, has huge potential for development and we prioritize agribusiness development, as well as small and medium farmers. The bank also has to further strengthen and diversify its product portfolio.

Regarding product portfolio development, what plans do you have for the mortgage market?

We see entering the mortgage segment as a way to take advantage of the extensive geographical presence of the bank in Colombia. However, we do not plan to cover all the products and services of this market. We will focus on the existing products, in order to encourage people to stay and thrive in their rural areas rather than leave their natural environments for urban areas.

What relationship does the bank have with the major agribusiness groups of the country?

We take part in large agro-industrial projects around the country through loans and other types of credit; however, we do it along with other big banking institutions in Colombia. Additionally, we are also considering the possibility of entering into infrastructure investment projects in the country as Colombia has one of the lowest levels of infrastructure in rural areas in the Latin America region. This has a negative effect on the level of competitiveness and efficiency in the agriculture industry. Finally, we also support the Ministry of Agriculture to develop regional policies more relevant on the national level, and that generates more value-added and helps to boost agricultural exports using different tools and policies.

How has the bank contributed to the government’s plan to address the lack of housing in the country?

Estimates show that there is a shortage of 1.9 million housing units in urban areas of the country, whereas in rural Colombia, this figure climbs up to 2.3 million. The government has implemented policies and plans at both the urban and rural level. Our institution, using funds provided by the Ministry of Agriculture, manages the plan at the rural level. These funds are made available to municipalities, which extend it to the lower ends of society in rural communities. The Universidad Nacional de Colombia plays the role of external agent to analyze the applications made by municipalities. From there, it continues under a particular framework to make these funds fully available. Up until now, we have provided housing units in around 599 municipalities, 66,875 have been contracted, and 42,072 have already been handed over. In this context, we are contemplating the possibility of granting productive loans to the families that have been awarded these houses, because they usually have enough land to operate productive agricultural activities or other related business activities.

© The Business Year – April 2014



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