The coronavirus has left an economic impact in several countries. For this reason, some governments are developing exceptional measures to mitigate its effects. For example, the suspension of tax and mortgage payments to lessen the economic pressure on small businesses and households.
In the United States, interest rates were reduced to almost zero and a US$700 billion stimulus program was launched in a bid to protect its economy, says Mario Miranda, director of finance at MonederoSMART.
Reports have been made that the Canadian bank could be analyzing the conditions for bidding by units for Citi's consumer banking operations in Costa Rica and Panama.
The group may be analyzing a Canadian bid for the operations of Citigroup in Costa Rica and Panama, two countries in Central America where it already has a presence.
Between 2011 and 2014 the number of people with bank accounts grew in all Central American countries, with noteworthy growth in El Salvador of 23%.
In Guatemala bankariztion grew by 19% in the period in question, reaching 9.2 million people with at least one bank account. In Honduras' growth was 11%, Costa Rica's 14%, Panama's 19%, and in Nicaragua, the increase was only 5%.
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.
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.
The Superintendency of Banks in Panama has reported that consumer loans amounted to $5.16 billion with four banks hogging 54% of the total.
The four banks holding 54.6% of the personal loans are la Caja de Ahorros, Banco Nacional, Banistmo and Banco General.
Estrategiaynegocios.net reports that "... In first place is Banco General, with 16.7%, managing $860.6 million; second is Banco Nacional, with 15.2%, managing $781.8 million; Banistmo, with a 13.3% market share, has an equivalent of $679.1 million and Caja de Ahorros, with 9.5% has a balance of personal loans of $492.5 million. "
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.
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.
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.
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 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.