Regional Consolidation Has Mixed Credit Implications for Latin

BANKING
FEBRUARY 14, 2014
Regional Consolidation Has Mixed Credit
Implications for Latin American Banks
SPECIAL COMMENT
Mergers and acquisitions generally lead to improved growth prospects for banks, but the credit
implications require a case-by-case review.
Table of Contents:
1. BANKS CHASE GROWTH
OPPORTUNITIES BEYOND THEIR
BORDERS
2. M&A ACTIVITY LAYS A
FOUNDATION FOR STRONGER
GROWTH AT LATIN AMERICAN BANKS
3. M&A ACTIVITY INVOLVING LATIN
AMERICAN BANKS WILL LIKELY
SPREAD BEYOND THE REGION
4. WHILE M&A IS BROADLY POSITIVE,
CREDIT AND REGULATORY RISKS MAY
INCREASE
MOODY’S RELATED RESEARCH
APPENDIX 1
2
4
7
7
8
9
Analyst Contacts:
MEXICO CITY
+52.55.1253.5700
Busy Juarez
+52.55.1253.5735
Associate Analyst
[email protected]
NEW YORK
+1.212.553.1653
M. Celina Vansetti+1.212.553.4845
Hutchins
Managing Director - Banking
[email protected]
Cross-border mergers and acquisitions proliferated in Latin America’s banking sector in the
period 2011-2013, fueled by regional growth opportunities, divestments by global banks and
favorable financing conditions. Colombian and Brazilian banks were among the most active
players, targeting banks in Central America, Mexico, and Chile (See Exhibit 1). This
consolidation trend has varied credit implications both on the individual banks that have been
active buyers and on the region’s banking systems in general.
Structural and cyclical factors are behind the regional consolidation among Latin American
banks. Long-term growth opportunities in countries with development potential led several
banks to consider cross-border mergers and acquisitions. Other factors supporting the increase
in acquisition activity over the last four years were the divesting and deleveraging of global
banks from the region, abundant liquidity and strong currencies. Growing cross-border trade
within Latin America and economic interdependence will likely lead banks to continue to
expand their reach across the region, although banks will be more selective, as easy financing
fades and acquisition targets become scarce.
The recent uptick in M&A lays the foundation for stronger financial performance. Bank
consolidation is broadly credit positive because it enhances franchise value and earnings
potential. Banks benefit from diversifying their businesses and geographic footprints, and
deepening their core funding capacity. Nevertheless, credit and rating implications on buyers
may vary depending on the risks associated with each individual deal.
New trends in regional consolidation will hinge on banks’ expansion plans in growth
markets, as well as cross-border activity between Latin America, Asia and Europe. Banks
interested in M&A are focusing on select transactions that fit their long-term regional
strategies. Many will pursue takeovers that will give them a platform to build regional
operations, or will grow organically in attractive markets to offset constrains in their home
market. Chinese banks looking to finance natural resource projects in Latin America are the
main driver behind interest from Asian banks. On the other hand, some large Latin American
banks, or their shareholding groups, are exploring opportunities to invest in Europe.
BANKING
While these developments are broadly positive, M&A activity raises credit risks for certain banks,
and creates new challenges for regulators. In their effort to gain scale and diversification, banks that
make purchases in Latin America may incur large acquisition costs and allow their capitalization to
weaken. Moreover, integrating new operations can create problems for asset quality and profitability,
especially when entering unfamiliar markets. Based on potential risks related to specific deals, we have
taken some negative rating actions following the announcement of mergers and acquisitions. As
regional consolidation leads to increased cross-border lending, regulators will have to focus more on
regional coordination among national bank supervisors.
1. Banks Chase Growth Opportunities Beyond Their Borders
Mergers and Acquisitions Activity Increased Across the Region
Throughout the period 2011 to 2013, the financial sector was one of the most active in M&A
transactions in Latin America, engaging in more than 45 cross border and domestic deals. Exhibit 1
details recent international deals and conditions.
EXHIBIT 1
List Of Cross-Border M&A Deals in Latin America
Buyer / Domicile
Target / Domicile
Completion/
Announcement Termination Transaction
Date
Date
Price
Financing
Itaú Unibanco / Brazil
CorpBanca / Chile
Jan-14
USD 1.8
billion
Banesco Group / Venezuela
NCG Banco / Spain
Dec-13
€1 billion
Promerica Financial Corp. /
Panamá
Banco de la Producción Dec-13
/ Ecuador
China Construction Bank /
China
Banco Industrial e
Comercial / Brazil
Oct-13
USD 725
million
Banco de Bogotá / Colombia
BBVA Panamá /
Panamá
Jul-13
BAC International Bank /
Panama
Grupo Financiero
Reformador /
Guatemala
Jun-13
Dec-13
Ownership
Stock-for- controlling
stock
shareholder with
transaction 33.58%
Business
Focus
Credit
implication
Universal
Positive
88.33%
Universal
Negative
majority stake
Corporate
Cash
72% stake
SME
USD 630
million
Cash
98.92%
Universal
USD 411
million
Cash
100%
Commercial/
Corporate
Positive
Mixed
Positive
Grupo Ribadeneira de Ecuador Banco de Antigua /
/ Ecuador
Guatemala
May-13
Banco de Crédito e Inversiones City National Bank of
/ Chile
Florida / USA
May-13
Bancolombia / Colombia
HSBC Bank / Panamá
Feb-13
Bancolombia / Colombia
Grupo Financiero
Agromercantil de
Guatemala /
Guatemala
Dec-12
Corpbanca / Chile
Helm Bank / Colombia
Oct-12
Continental / Paraguay
NBC Bank - Banco
Múltiplo / Brazil
Oct-12
Nov-13
BTG Pactual / Brazil
Bolsa y Renta /
Colombia
Jun-12
Dec-12
USD 52
million
Cash/Stock 100%
Securities
Brokerage
Services
Positive
Mizuho Bank Ltd. / Japan
Banco WestLB do Brasil Jun-12
S.A. / Brazil
Jul-13
USD 380
million
Undisclosed 100%
Wholesale
Positive
2
FEBRUARY 14, 2014
Microfinance
USD 883
million
Cash
100%
Commercial/
Residential
Real Estate
Negative
Oct-13
USD 2.2
billion
Cash
100% of ordinary Commercial/
shares
Retail
Negative
Oct-13
USD 217
million
Cash
40% of the shares Commercial/
of the controlling Corporate
holding
Neutral
USD 1.3
billion
Cash
100%
Commercial/
Retail
Positive
100%
Corporate/
SME
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
EXHIBIT 1
List Of Cross-Border M&A Deals in Latin America
Completion/
Announcement Termination Transaction
Date
Date
Price
Financing
Ownership
Business
Focus
100%
Universal
Buyer / Domicile
Target / Domicile
GNB Sudameris / Colombia
HSBC subsidiaries /
Colombia, Perú,
Uruguay and Paraguay
May-12
Banco de Crédito del Perú /
Perú
Investment Bank IM
Trust / Chile
Apr-12
Davivienda / Colombia
Corpbanca / Chile
Banco de Crédito del Perú /
Perú
Credit
implication
USD 400
million
Cash
Jul-12
USD 185
million
Undisclosed 60.6% controlling Investment
stake
Bank
Positive
HSBC Central America / Jan-12
El Salvador, Costa Rica
and Honduras
Dec-12
USD 801
million
Cash
100%
Universal
Positive
Banco Santander /
Colombia
Dec-11
Jun-12
USD 1.2
billion
Cash
95%
Universal
Positive
Correval / Colombia
Dec-11
Apr-12
USD 77
million
Cash
51% controlling
stake
Investment
Brokerage
Services
Positive
Bank of Nova Scotia / Canada Banco Colpatria Red
Multibanca Colpatria /
Colombia
Oct-11
Jan-12
USD 1
billion
Cash/Stock 51%
Retail
Neutral
Industrial & Commercial Bank Standard Bank
of China / China
Argentina / Argentina
Aug-11
Dec-12
USD 600
million
Cash
Corporate/Re
tail
Positive
BTG Pactual / Brazil
Celfin Capital / Chile
Aug-11
Feb-12
USD 600
million
Cash/Stock 100%
Brokerage
Firm
Positive
Banco do Brasil /Brazil
Florida-based Eurobank Apr-11
/ USA
Jan-12
USD 6
million
Cash
100%
Retail/SME
Positive
Bank of Nova Scotia / Canada Nuevo Banco Comercial Dec-10
/ Uruguay
Jun-11
Cash
100%
Retail
Neutral
Grupo Aval / Colombia
BAC Credomatic /
Central America
Jul-10
Dec-10
USD 1.9
billion
100%
Capital
injection in
the form of
equityconvertible
debt/Cash
Retail
Positive
Banco do Brasil /Brazil
Banco Patagonia /
Argentina
Apr-10
Apr-11
USD 480
million
Cash
Retail
Positive
80% stake
51% controlling
stake
Positive
Sources: Moody’s Investors Service, Bloomberg, Lain Finance, BNamericas, national and international media, websites and financial statements of the entities mentioned
Opportunities for Long-Term Growth Will Continue to Drive Acquisitions
3
FEBRUARY 14, 2014
»
For the most part, recent M&A in Latin America benefited from the combination of structural
and cyclical factors. In recent years, divestitures from the region by major European banks, such
as HSBC, BBVA and Santander, coupled with exceptionally easy financing conditions were the
main drivers behind the rise in cross-border mergers in Latin America. Strong currencies made
acquisitions advantageous to the buyers, and allowed banks to seek opportunities for business and
client expansion in neighboring markets that offered attractive growth prospects and development
potential. Banks also followed the growing cross-border activities of corporations in the region, as
trade gained importance.
»
These favorable market conditions will fade in 2014, but growth opportunities will still drive
new deals. Divestment opportunities have already diminished because the scaling back of
European banks in the region is generally complete. Potential new acquisition targets are more
scarce. Also, stable but below-trend economic growth and shifts in liquidity dynamics following a
tapering of monetary stimulus from the Federal Reserve may disrupt access to financing.
Nonetheless, select regional consolidation may still occur.
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
2. M&A Activity Lays a Foundation for Stronger Growth at Latin American Banks
»
Credit and rating implications of cross-border acquisitions on buyers are difficult to generalize
because of the varying impact on creditworthiness. While some transactions may not have an
immediate impact on the credit rating of the banks involved, the benefit for the purchasing bank
will be seen in increased revenue and earnings in the coming years. Our assessment balances
potential benefits to buyers, including franchise value and earnings accretion and access to
funding, against the risks of shifting business strategies and adapting to a new operating
environment. We also focus on risks related to the financing terms of the deal, and the effects on
the buyers’ credit standing.
»
Acquisitions allow banks to achieve greater scale and diversification, which enhances franchise
value and leads to more stable growth. As banks gain exposure to markets with higher growth
potential than domestic markets, there is the possibility for better business mix and access to a
broader deposit base that leads to improved core earnings capacity. For example, the acquisition of
BAC Credomatic in 2010 by Colombia’s Banco de Bogotá substantially bolstered its net interest
margin because of the higher-yielding loans and lower-cost deposits at the new subsidiary, which
focuses on retail banking. Following its acquisition of HSBC’s El Salvador, Costa Rica and
Honduras’ subsidiaries in January 2012, Colombia-based Banco Davivienda’s net income rose
9.6% in the first nine months of 2013, supported by a greater contribution to earnings from its
foreign subsidiaries.
EXHIBIT 2
Largest Regional Franchises In Latin America, US$ millions
Bank
Period
Banco do Brasil
Dec-13
Itaú Unibanco Holding Dec-13
Total Assets Footprint
552,682 Brasil, Argentina, United States, Asia
468,675 Brasil, Argentina, Chile, Paraguay, Uruguay, México, Colombia, Perú,
Europe, Caribbean, United States, Middle East, Asia
Banco BTG Pactual
Group
Bancolombia
Banco de Bogotá
Sep-13
82,931 Brasil, Perú, Chile, Colombia, Europe, Caribbean, United States, Asia
Dec-13
Sep-13
Credicorp
Davivienda
Dec-13
Sep-13
67,710 Colombia, Panamá, Guatemala and El Salvador
49,986 Colombia, Panamá, Costa Rica, Guatemala, El Salvador, Honduras
and Nicaragua
40,982 Perú, Chile, Colombia, Bolivia
28,218 Colombia, Panamá, Costa Rica, Honduras and El Salvador
Source: Moody's Banking Financial Metrics and Issuers’ financial statements
4
FEBRUARY 14, 2014
»
Cross border M&A activity generally reduces vulnerability to economic distress in any single
country. Brazil’s Itaú Unibanco is building South America’s largest regional franchise. Its latest
deal – the agreement in January 2014 with Chile’s CorpGroup to merge CorpBanca and Banco
Itaú Chile - further enhances earnings diversification and business potential in the region. The
deal will boost Itaú Unibanco’s economies of scale in Chile and will expand its presence in
Colombia, as it gains access to Corpbanca’s subsidiaries in that market. Moreover, Itaú’s Andean
expansion helps offset a potential slowdown in Brazil’s economy, because both Chile and
Colombia have a higher potential for growth in the coming years.
»
Colombian financial groups Bancolombia and Grupo Aval have employed some of the most
aggressive cross-border expansion strategies in the region. Both financial groups pursued
acquisitions outside Colombia to improve their growth prospects. As shown in Exhibit 3,
acquisitions by Banco de Bogota and Bancolombia in Central America allowed them to expand their
balance sheets rapidly, attaining market share that would otherwise require years of organic growth.
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
EXHIBIT 3
Colombian Financial Group´s Regional Franchise is Complemented By Its New Acquisitions
Market shares before and after announced acquisitions
Total Loans Bogota
Total Deposits Bogota
Total Loans Bancolombia
Central America
Central America
Guatemala
Guatemala
Panama
Panama
-
200
400
600
800
1,000
1,200
1,400
1,600
-
200
Increase in market shares by basis points
400
600
Total Deposits Bancolombia
800
1,000
1,200
1,400
1,600
Increase in market shares by basis points
Source: Superintendencia Financiera de Colombia, Superintendencia General de Entidades Financieras – Costa Rica, Superintendencia de Bancos – Guatemala, Superintendencia del Sistema Financiero –
El Salvador, Comisión Nacional de Bancos y Seguros – Honduras and Superintendencia de Bancos y de Otras Instituciones Financieras – Nicaragua
»
Financing conditions are critical when evaluating the credit implications of a transaction.
Uncertainty surrounding financing terms can make it difficult to gauge the impact of a transaction on
the bank's capital structure or its ability to replenish capital. If financing is not secured, the acquisition
can negatively affect the bank’s capital and balance sheet or expose the acquiring bank to unfavorable
debt or capital markets conditions and volatility. For example, Bancolombia’s acquisition of HSBC
Panama led to weakened capital ratio and triggered a negative outlook on its ratings.
»
Price discipline ensures that leverage and goodwill remain manageable. Overpayment for an
acquisition, especially in a context of growing competition, can lead to a sizable increase in
leverage or in the proportion of goodwill in the acquiring banks’ capital structure. We estimate
that goodwill will rise to a peak of 32% of Colombian banks’ Tier 1 capital in 2013-14, from
20% as of year-end 2012, as a result of acquisitions.
EXHIBIT 4
Price-to-Book Value of Selected Transactions Across Latin America
4.0
Scotiabank - Colpatria
3.5
CorpBanca - Santander
Bancolombia - HSBC Bank
Panamá
P/BV, times (x)
3.0
BAC - Reformador
2.5
Bancolombia - Agromercantil
Banco de Bogoá - BAC
2.0
Grupo Colpatria - Colpatria
CorpBanca - Helm Bank
1.5
Itau - CorpBanca
Davivienda - HSBC CA
1.0
0.5
0%
5%
10%
15%
20%
25%
30%
ROE
Source: Moody's Banking Financial Metrics, Issuers’ financial statements and Credicorp Capital
5
FEBRUARY 14, 2014
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
»
Operating conditions in targeted markets may lead to changes in risk positioning. Colombian
banks are expanding in countries that have a high level of dollarization, low economic growth and
weak corporate strength, which presents additional challenges. Acquisitions of Central American
banks with lower asset quality than the acquiring bank’s domestic market may add risk to the
bank’s loan mix and create asset quality pressure.
EXHIBIT 5
Sample of Ratings Movements When A Negative Action Was Taken Initially
MOODY'S Rating Action
Transaction
Following Announcement
Upon Completion
Bancolombia - HSBC Bank
Panamá
Placed ratings of Bancolombia on review for
downgrade
Confirmed Bancolombia's ratings; changed
outlook to negative
Banorte - Afore Bancomer
Affirmed Banorte's ratings; changed outlook to
negative
Affirmed Banorte's ratings, outlook changed to
stable
CorpBanca Chile - Helm Bank
Negative outlook on ratings of CorpBanca and
Corp Group Interhold
Affirmed CorpBanca's standalone financial
strength, lowered deposit and debt ratings to
Baa2; outlook stable; ratings of Corp Group
Banking affirmed
Davivienda - HSBC Central
America
Affirmed Banco Davivienda's ratings with a
negative outlook
Affirmed Davivienda's ratings; outlook
changed to stable
ICBC - Standard Bank Argentina Placed Standard Bank Argentina's ratings on
review for possible downgrade
Confirmed the local currency ratings of
Standard Bank Argentina
Grupo Aval - BAC Credomatic
Affirmed Banco de Bogotá's ratings; outlook
changed to stable
Placed Banco de Bogotá's ratings on review for
possible downgrade
Source: Moody’s Investors Service
Latin American Banks Will Be More Strategic About M&A in 2014
6
FEBRUARY 14, 2014
»
Slower economic growth, rising interest rates, weaker currencies and an absence of available
targets will compel banks to be more selective going forward. Many large banks, especially those
in Colombia, have less available cash and face higher financing costs than they did just a few years
ago. Banks will be more conservative and less inclined to take on opportunistic deals, instead
focusing on select transactions that will fit within their long-term regional strategies.
»
Mexico, Chile, Colombia and Peru will attract the most interest from investors. Far-reaching
reforms of Mexico’s financial, energy and electricity sectors passed in 2013 have made the country
a prime target for Latin American banks looking to expand regionally. In 2013, Mexico increased
by 13% its share of the investment banking profit pool cementing its position as the secondlargest market for investment-banking fees in the region, according to Dealogic. Brazil’s Banco
Itaú BBA S.A. and Banco BTG Pactual S.A. both opened new broker dealer operations in Mexico
in October 2013 and January 2014, respectively. Chile, Colombia and Peru also attracted the
attention of investment banks, as demonstrated by BTG Pactual’s acquisition of leading Chilean
brokerage firm Celfin in February 2012, and Bolsa y Renta in Colombia in June 2012. Peru’s
BCP also bought a broker dealer IM Trust in Chile in April 2012.
»
Small banks facing intense competition from larger newcomers may try to position themselves
for takeovers. Some have already refocused their businesses and improved credit quality and
underwriting standards through domestic bank acquisitions. Brazil’s Banco Indusval S.A., for
example, which cleaned up its loan portfolio, shifted the focus of its franchise towards selected
lending segments, and acquired boutique investment bank boutique Voga, in May 2013, and
Banco Intercap (unrated), in June 2013.
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
3. M&A Activity Involving Latin American Banks Will Likely Spread Beyond the
Region
»
New global players, especially Chinese banks, have taken an interest in the region. Industrial and
Commercial Bank of China Ltd.’s purchase of Argentina’s Standard Bank Group Ltd. in 2011
marked a starting point for a period of investment in the Latin American banking sector. Rising
economic ties between Asia’s growing economies and natural resource exporters in Latin America
will continue to drive interest. In 2013 China Construction Bank Corp. agreed to buy a majority
stake of Brazil’s Banco Industrial e Comercial SA. (BicBanco). The Chinese bank also plans to
invest $200 million in Chile, where it recently applied for a banking license. The latter is aimed at
meeting the needs of Chinese companies wishing to operate in the Chilean market.
»
Latin American financial groups are also looking outside the hemisphere, including
opportunities in the US and Spain, where banks are in search of capital. Recent deals saw Latin
American groups engaging in minority participations in Spanish banks. such as Colombia’s Banco
GNB Sudameris in Banco Sabadell, S.A. or Mexico’s Banco Ve por Más, S.A and its shareholders
in Banco Popular Español. Chile’s BCI and Banco do Brasil also ventured in the US market with
acquisitions of small banks in Florida.
4. While M&A is Broadly Positive, Credit and Regulatory Risks May Increase
7
FEBRUARY 14, 2014
»
M&A activity also brings risks to buyers, especially for banks that enter into leveraged deals and
incur execution risks. We have taken some negative actions following the announcement of
mergers or acquisitions, acknowledging potential execution risks. While acquisitions can help
banks diversify their client base and expand their footprint, the benefits may take time to
materialize. For example, Bancolombia’s acquisition of HSBC Bank Panama will only be accretive
in 18 month’s time because of sizable investments in systems and technology.
»
Integrating new businesses into an existing bank presents a challenge, especially working in new
jurisdictions. Most transactions have resulted in the acquirer obtaining full control over its target
bank. However, full control does not guarantee success. For banks with strong domestic market
positions but limited experience in running international operations, the transition may test
management’s capabilities.
»
Increased interconnectedness of economies and banking systems unlocks growth potential. The
creation of regional banks is a catalyst for increased cross border activity and maximization of
economies of scale and business expertise, as products and management skills are transferred across
the region. Larger banking groups will tend to be more profitable as they command pricing power
and attract more business. Nevertheless, increased regional competition puts pressures on margins
and market position in the short run, particularly for weaker peers.
»
Regulating financial institutions with a presence in several jurisdictions will be a challenge for
banking regulators. While regulatory oversight in the region tends to be prudent, banks’
expanding regional presence challenges the ability of regulators to coordinate banking regulation
and supervision across Latin America. Regulators also must pay more close attention to crossborder risks and to their ability to gather information and respond to idiosyncratic situations.
Achieving consistency of accounting and reporting is another challenge for banks and regulators in
the region, as they engage in expansion and acquisitions.
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
Moody’s Related Research
Issuer Comments:
»
Brazil’s Itau Unibanco Acquires Control of Chile’s CorpBanca, a Credit Positive, February 2014
(163789)
»
Grupo Aval’s Porvenir Makes Credit Positive Acquisition of BBVA’s Colombian Asset Manager,
January 2103 (148901)
»
Bancolombia Completes Acquisition of HSBC Panamá, a Credit Negative, November 2013
(160363)
»
Argentina’s Approval of SBA Sale to ICBC Is Credit Positive for Standard Bank of South Africa
and Standard Bank Argentina, November 2012 (147514)
»
Mizuho’s Brazilian Acquisition Creates a Credit Positive Beachhead, June 2012 (143333)
»
GNB’s Acquisition of HSBC Subsidiaries in Colombia, Peru, Uruguay and Paraguay Is Credit
Positive, May 2012 (142230)
»
BCP’s Acquisition of Chile’s IM Trust Is Credit Positive, April 2012 (141746)
»
Corpbanca’s Bold Purchase of Santander Colombia Is Credit Positive, December 2011 (138049)
»
BTG Pactual’s Acquisition of Chilean Broker Boosts Its Latin American Presence, August 2011
(135518)
»
Banco do Brasil Acquisition’s of Eurobank Would Be Credit Positive, April 2011 (132724)
»
Grupo Aval’s Acquisition of BAC Credomatic May Hurt Banco de Bogotá, July 2010 (126528)
Credit Focus:
»
Banco de Bogotá & Bancolombia: Peer Comparison, December 2013 (161415)
Banking System Outlook:
»
Colombia, October 2013 (157157)
Industry Outlook:
»
2014 Outlook - Latin American Banks, November 2013 (153363)
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of
this report and that more recent reports may be available. All research may not be available to all clients.
8
FEBRUARY 14, 2014
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
Appendix 1
List Of Domestic M&A Deals In Latin America
Buyer / Domicile
Target / Domicile
Completion/
Announcement Termination Transaction
Date
Date
Price
Credicorp / Perú
Mibanco / Perú
Feb-14
Financing
USD 179
million
Sagicor Group Jamaica Ltd / Royal Bank of Canada's Jan-14
Jamaica
banking and stock
trading businesses in
Jamaica / Jamaica
USD 84
million
Undisclosed
Centro Financiero BHD /
Dominican Republic
Grupo Financiero Leon / Dec-13
Dominican Republic
CI Banco / México
New York Mellon
México / México
Aug-13
Banco Indusval / Brazil
Banco Intercap / Brazil
Jun-13
Nov-13
Itaú Uruguay / Uruguay
Retail business of
Citigroup / Uruguay
Jun-13
Nov-13
Davivienda / Colombia
Corredores Asociados / Feb-13
Colombia
Sep-13
USD 63
million
Cash
Grupo Aval's pension fund
management company
(Porvenir) / Colombia
BBVA's Colombian asset Dec-12
manager (Horizonte) /
Colombia
Apr-13
USD 530
million
Banorte / México
Afore Bancomer /
México
Jan-13
USD 1.6
billion
Dec-12
Business
Focus
Credit
implication
60.68% stake
Microlending
Positive
100%
Universal
Ownership
CF BHD and
associates (50% of
the shares) and
Banco Leon (25%
and part of the
purchase of the
shares that
Sabadell Bank of
Spain has in the CF
BHD)
MXN 500
million
USD 49
million
100%
Trust Fund
Services
100%
SME
Negative
Retail
Positive
100%
Investment
Bank
Positive
Undisclosed
99.99%
Asset
Managemen
t
Positive
Cash
50%
Pension
Business
Unit
Positive
Retail
Positive
Cash
Cash
BBVA Paraguay / Paraguay Citibank's credit card
portfolio / Paraguay
Nov-12
Banque Heritage / Uruguay Lloyds TSB Bank /
Uruguay
Sep-12
Cash
100%
Corporate/R Positive
etail
Banco de Servicios y
Transacciones Holding
Group / Argentina
Banco Cetelem /
Argentina
Aug-12
Undisclosed
100%
Retail
Oriental Financial Group /
Puerto Rico
BBVA Puerto Rico /
Puerto Rico
Jun-12
Cash
100%
Universal
Banco Supervielle /
Argentina
Cordial Compañía
Aug-11
Financiera (former GE
Compañía Financiera) /
Argentina
100%
Retail
Mercantil Colpatria /
Colombia
Banco Colpatria /
Colombia
May-11
Undisclosed Undisclosed
GE's 49.77%
stake
Universal
Grupo Intercam / México
Banco Regional del
Norte / México
Mar-11
Undisclosed Cash
100%
SME
9
FEBRUARY 14, 2014
Dec-12
Jun-11
USD 500
million
Mixed
Positive
Positive
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
List Of Domestic M&A Deals In Latin America
Buyer / Domicile
Target / Domicile
Completion/
Announcement Termination Transaction
Date
Date
Price
ABC Holding and Empresas Banco Amigo / México
Tolteca (a subsidiary of
Cemex) / México
Mar-11
BTG Pactual / Brazil
Feb-11
May-11
USD 269
million
Oct-10
Apr-11
Aug-10
Banco Panamericano /
Brazil
Grupo Financiero Banorte / Grupo Financiero Ixe /
México
Mexico
Financing
Ownership
Business
Focus
Credit
implication
100%
Commercial
/Retail
Positive
Cash
51% controlling
stake
Retail/SME
Positive
USD 1.1
billion
Stock
100%
Universal
Positive
USD 6
million
Cash
100%
Retail
Positive
Grupo Macro / Argentina
Banco Privado de
Inversiones / Argentina
Comafi / Argentina
ABN-AMRO Bank N.V.
Sucursal Argentina /
Argentina
Jun-10
Jul-11
Cash
100%
Wholesale
Neutral
BBVA Uruguay / Uruguay
Credit Uruguay Banco / Mar-10
Uruguay
Jan-11
Undisclosed
100%
Commercial
/Retail
Positive
Regional / Paraguay
ABN AMRO / Paraguay
Oct-09
Cash
100%
Commercial
Positive
Source: Moody’s Investors Service, Bloomberg, Latin Finance, BNamericas, national and international media, websites and financial statements of the entities mentioned
10
FEBRUARY 14, 2014
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS
BANKING
Report Number: 165025
Author
Busy Juarez
Production Associate
Srinivasan Raghavan
Research Writer
Matthew Walter
© 2014 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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11
FEBRUARY 14, 2014
SPECIAL COMMENT: REGIONAL CONSOLIDATION HAS MIXED CREDIT IMPLICATIONS FOR LATIN AMERICAN BANKS