With transparent financial statements, solid profits and prudent regulation, Colombia’s financial sector today is chiefly controlled by local players. This is due in large part to historical events of the 1980s, which deterred many foreign investors from entering the country.
“Our financial system was not eagerly or desperately waiting to be bought by big international banks and today it is almost completely managed by Colombians,” explains Luis Carlos Sarmiento Gutierrez, president and son of the CEO of Colombia’s largest banking conglomerate, Grupo Aval Acciones y Valores S.A.
The holding owns controlling interests in four leading Colombian banks (Banco AV Villas, Banco de Occidente Credencial, Banco de Bogota, and Banco Popular), as well as a merchant bank, Colombia’s largest pension fund manager, and several financial subsidiaries.
Although Grupo Aval has around $100 billion in assets under management and represent nearly one-third of all assets in Colombia’s financial sector, the group shows no signs of slowing down. Last year, Grupo Aval purchased 100% of BAC-Credomatic – formerly controlled by General Electric Co. – for $1.9 billion.
This investment increased Grupo Aval’s presence in the region, strategically placing it in seven Central American countries where it had not previously been. “We have also obtained higher participation in credit card insurance in Central America. We bill about 33% of all the credit cards at BAC and now we have 62% market share in the so-called acquisition,” says Mr. Sarmiento Gutierrez.
More recently, in May this year Grupo Aval’s board of directors approved an operation to increase its participation in Colombia’s Banco Popular from 30.7% to 93.7%. In addition, Grupo Aval is preparing to list its shares on Wall Street, becoming the 10th Colombian company with American Depositary Receipts (ADRs) on the North American stock exchange. With this move, the holding company expects to raise between $500 million and $1 billion in funds which can then perhaps be used to acquire more banks in Central America and the Caribbean.
“We would love to have foreign investment now,” says Mr. Sarmiento Gutierrez. “At Grupo Aval you would achieve a solid investment based on 30 years of experience and constant growth. Besides, we offer safe dividend distribution policies and asset-value increment policies.”
Thanks to its organic growth and new capitalizations, the group’s president expects Grupo Aval’s profits to rise by 60% to $834 million in 2011.