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.
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.
Mortgage loans and loans for the purchase of vehicles, as well as financing through credit cards are the most dynamic categories in the banking system's loan portfolio.
In the period up until January 2015 it was reported that Panamanians owed approximately $25 billion in personal loans. The balances on credit cards and personal loans recorded an increase of 15.6% compared to January 2014. In the case of credit cards there was a growth of 10.7% compared to the same period last year.
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.
Analysis by Fitch Ratings projects that banks in the region will maintain strong balance sheets and have stable profitability in 2014.
Excerpted from Fitch Ratings:
Differential Growth and Opportunities: Low financial depth, in most systems, continues to provide significant opportunities for expansion of bank balance sheets; although this is limited by low average income levels. In 2014, assets in the region could increase about 10%, mainly driven by higher portfolios. Central American banking portfolio growth will reach double digits, except for the systems in El Salvador and Panama, which will grow at a slower pace.
Local financial groups are interested in negotiating with the U.S. company in order to acquire the consumer banking operation in Nicaragua.
The consumer banking business that will be left behind by Citigroup could return to the hands of Central American companies, as some have expressed interest in acquiring the operation in Nicaragua, although it is not yet known who the interested parties are.
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. As a result, Citigroup intends to exit its consumer businesses in 11 markets. The new consumer banking footprint will serve 57 million customers in 24 markets which capture more than 95% of the existing revenue base in GCB, while further simplifying operations and improving performance.
The financial institution, with a portfolio of consumer loans of $869 million, is the market leader in El Salvador.
As of June 2012, with a portfolio of more than $2.523 million, the balance of consumer banking was $869 million, commercial loans $1,112.7 million, housing $415.9 million and credit cards $108 million, said Juan Carlos Angulo, product manager at the bank.
They argue that rates cannot be lowered any more, and they would prefer regulations issued by the Superintendence instead of new laws.
Juan Carlos Arguello, president of Asobanp (Association of Private Banks of Nicaragua) said that the sector does not support an amendment to Law 515 of Credit Cards, as they consider more convenient to have regulations issued by the Superintendency of Banks, as this would be "less disruptive to the system", he said.
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