Combining four of Colombia’s top financial organizations (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas) – Grupo Aval was established sixteen years ago.
Today, working through these subsidiaries, the group provides a wide variety of financial services and now stands as the country’s leading holding company, on top of having several important investments in Central America.
Just last year the group made three more significant investments in the region, acquiring Colombia’s own Horizonte Pension Fund, the Reformador Financial Group of Guatemala and BBVA’s operations in Panama.
These latest additions to the company are part of an expansion strategy which has seen the group significantly step up its presence in the region over recent years.
“When you already have around 30 per cent of (Colombia’s) entire financial system’s market share, the authorities are obviously less receptive to your expansion applications,” says the president of Grupo Aval, Mr. Luis Carlos Sarmiento, explaining why recent investments have been more focused towards foreign markets as opposed to the local one.
He continues: “What we’ve had to do is figure out what to invest in to maintain the group’s profitability.”
And so, with the possibility of taking over yet more of the Colombian market – as Mr. Sarmiento asserts – now looking increasingly limited, the answer to maintaining profits has been the key reason behind its regional expansion efforts.
After exploring the options and developing a growth strategy, the company decided that investing in other Latin countries would mean that its presence there would not only be large enough to be relevant, but that nearby nations would also have similar regulations to those in Colombia.
“We like control,” continues Mr. Sarmiento. “This means any financial investment would be more than something symbolic, it would be a controlling investment.”
“So we started looking at the region from the south to the north. Chile, for example, is a very interesting country that has all the parameters except that it isn’t profitable. Brazil is too large for us (when compared to the local financial groups and banks), Uruguay and Paraguay are too small and we don’t see eye to eye with Ecuador, Bolivia or Venezuela.
“Then we started looking into Central America and the Caribbean and we decided we would invest in that region, but only if we could buy a bank with presence in the whole area.”
Then in 2010 the waiting for the right investment finally paid off. General Electric, which had recently bought BAC Credomatic (one of the main financial holding groups of Central America), had to sell.
After completing the purchase through its main subsidiary, Banco de Bogotá, Grupo Aval now operates in six Central American countries altogether, including Costa Rica, El Salvador, Honduras and Nicaragua. Meanwhile, last year’s investments in Panama and Guatemala mean that the company has extended its already substantial presence in the area even further.
“It is the biggest private bank of Costa Rica, the first or second in Honduras, the second or third in El Salvador and the first or second in Nicaragua,” declares Mr. Sarmiento.
Looking forward, while business offers made to Grupo Aval in Europe haven’t exactly been scarce, especially in Spain, according to Mr. Sarmiento the group doesn’t feel it has the managerial capacity to handle greater expansion outside of the continent just yet.
With Caribbean countries, as well as Mexico and the United States all on the list of possible destinations, for now, six countries – plus Colombia – seem to be enough for the fiercely ambitious Grupo Aval.
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