The sale of Citibank operations in El Salvador to Honduras' Grupo Terra has been formalized, with the insurer SISA included in the transaction.
From a statement issued by the Stock Exchange of El Salvador:
It was reported that subject to regulatory approvals from the competent Salvadoran authorities, Inversiones Financieras Citibank, S.A. has sold to the company designated by the Terra Group, all of its shares in Citi Tarjetas de El Salvador, S.A. de C.V.and Banco Citibank de El Salvador, SA and that Citibank Overseas Investment Corporation and Citibank Investments, SA, sold the company designated by the Terra Group its minority stake in Cuscatlán Valores, SA de CV Casa de Corredores de Bolsa.
The Colombian Bank which already has a presence in Central America said it is still interested in a possible acquisition of the assets of Citi's consumer banking operations in Central America.
A Spanish bank was the first entity to be interested in acquiring the consumer banking operations belonging to Citi in the region, however the negotiations did not come to fruition and now it has been reported that the Colombian bank, which according to reports has been interested from the beginning, is in talks with Citi ombudsmen over the possible purchase of its regional operations, estimated at $1.5 billion.
It has been reported that the Spanish firm Banco Popular has abandoned the negotiations for the purchase of Citigroup's consumer banking unit in the region.
Reports published by Bloomberg.com indicate that a purchase of consumer banking operations in the region would not be aligned to the strategic plan of the Spanish Banco Popular SA, who for weeks had been holding negotiations with Citigroup.
Citigroup could be soon finalizing the sale of its consumer banking operations in Central America with Bank of Spain, which could be paying $1.5 billion.
A report on Bloomberg.com noted that negotiations between the US bank and the Spanish bank are very advanced, and only the only thing left is to define the final value of the transaction, which could amount to $1.5 billion, according to unnamed sources cited by Bloomberg.
Aside from the Colombian Grupo Aval, the Spanish company Banco Popular may also be in negotiations to acquire Citi's entire consumer banking operation in Central America.
The sixth largest bank in Spain, which at the moment has no presence in Central America, could be interested in acquiring the consumer banking operation that Citi has put up for sale in Costa Rica, El Salvador, Guatemala, Nicaragua and Panama.
Citigroup has sold 75% of the shares in Administradora de Fondos de Pensiones Confía to the company Inversiones Atlántida.
Although the amount of the sale has not been released, the three institutions involved have confirmed the transaction. According to authorities at Citigroup, this operation does not affect the rest of the bank's business in El Salvador and they are just waiting for approval from the Superintendent of the Financial System in order to complete the transfer.
The banks Davivienda and Grupo Aval, already present in Central America, could be in talks with Citi to acquire its consumer banking operations in the region.
The sale of assets of Citigroup in 7 countries in Latin America represents an expansion opportunity for Colombian banks. Bloomberg reports cited by Elfinancierocr.com note that in the case of Banco Davivienda, it's interest is soley in the consumer banking units in Peru and Guatemala.
The group has announced that as part of its long-term strategy it will withdraw from the consumer banking business in Costa Rica, El Salvador, Panama, Guatemala and Nicaragua.
Extract from a statement issued by Citigroup:
Citigroup today announced strategic actions to accelerate the transformation of its Global Consumer Banking (GCB) to focusing on those markets where it has the largest scale and growth potential.
The convulsions in Venezuela should not be seen as merely a political issue, but also from the point of view of the economic insecurity it creates in the region.
The effects of the crisis in Venezuela are not only reflected in the economy but spread quickly to the rest of the continent, particularly in countries with the most trade and economic ties.
In preparation for his visit to the region, the U.S. president is meeting with business leaders who have a "significant presence" in Mexico and Central America.
According to the White House, the goal is to talk with employers, before his trip to the region next week, about "opportunities to expand U.S. trade with Mexico and Central America", with the goal of creating jobs and "reducing barriers to growth" in the region.
The region which produces 13% of the bank's Latin American utilities is seen by the bank as an economic block.
The Guatemalan newspaper Siglo XXI interviewed the CEO of Citi Guatemala, Juan Miró, who reported that they are currently working on optimizing the IT platform in order to better serve the Central American market.
He said that among the options they want to offer regional clients are: "For them to be able to make local and regional transactions as if were a single Citibank Central America bank. For example, they can view their accounts in the region, make fund transfers from one country to the other and pay credit cards from another country in their country of origin; these are services we are already offering but the idea is to make them better."