As Chilean firm CorpBanca prepares to enter Colombia’s banking sector with the purchase of Banco Santander SA’s local unit there, it will have a powerful Colombian conglomerate, Grupo Santo Domingo, to help guide it.
Grupo Santo Domingo, one of the most respected and well-known Colombian conglomerates, with interests in everything from television stations to retail, said Wednesday it’s buying a $100 million, or roughly 3%, stake in CorpBanca.
The announcement comes one day after Banco Santander said it’s selling its Colombian businesses to CorpBanca in a deal that values the Spanish bank’s Colombian assets at approximately $1.23 billion.
Santander Wednesday also announced that it had sold a 7.8% stake in its Chilean unit, raising $950 million as part of a broad effort to bolster its capital position.
“The association with CorpBanca, one of the best commercial banking operators in Latin America, and the [planned] acquisition of Banco Santander Colombia by CorpBanca represent for Grupo Santo Domingo our return to the Colombian financial business,” the Colombian conglomerate said in a statement.
Grupo Santo Domingo will buy the $100 million stake in the coming months, said CorpBanca, which is Chile’s fourth-largest private bank, with a local market share of 7.5% for loans and 7.2% for deposits on Oct. 31.
CorpBanca will fund its purchase of Banco Santander Colombia and the associated assets largely from its own resources and a capital increase of about $450 million.
Santo Domingo’s purchase represents a “3% or 3.5% stake in CorpBanca,” Mario Chamorro, CorpBanca’s chief executive, told Dow Jones.
“Two important Latin American economic groups will join forces as shareholders in CorpBanca to implement [CorpBanca’s] expansion plans and support the development of business relationships and value creation for clients in Colombia,” said CorpBanca separately in a statement.
Banco Santander Colombia has a 2.7% market share in loans and 4.7% in deposits as of Sept. 30.
“CorpBanca will look to grow organically in Colombia like it’s done in Chile, by making headway into mid- and lower-income clients and in the large-company segment,” Chamorro said. He added that CorpBanca is now focused on Colombia and isn’t looking at opportunities in other countries “at the moment.”
The aggressive move by CorpBanca falls in line with a recent trend of Chilean companies looking beyond national borders to Colombia for expansion opportunities.
Among Chilean companies, carrier LAN Airlines SA bought Colombia’s Aires airline late last year. Fuel-and-forestry conglomerate Empresas Copec SA recently increased its indirect controlling stake in Colombian fuel company Terpel. And department store SACI Falabella started operating its bank, Banco Falabella, there earlier this year.
CorpBanca’s purchase also comes as regional integration intensifies with the Integrated Latin American Market, or MILA, cross-trading platform between the Chilean, Colombian and Peruvian stock exchanges, entering its seventh month of operations, and as plans unfold to develop a cross-border foreign exchange trading platform between those nations.
“The purchase by CorpBanca represents a concrete step in the integration of the economies and markets of Latin America, a process that started with the creation of the integrated MILA stock exchange,” said Jose Restrepo, an analyst at Colombia’s InterBolsa brokerage.
In recent months, the euro-zone’s deepening sovereign debt crisis has created opportunities for Latin American companies in their economically resilient home markets as European companies scramble to sell non-core or far-flung assets to boost liquidity and shore up their capital stock.
Hence, Santander’s other sale, Wednesday, of a 7.8% stake in its Banco Santander-Chile unit, raising $950 million.
Colombian holding company Grupo de Inversiones Suramericana is set to become a regional leader in its core pension and insurance sectors with an upcoming $3.5 billion purchase of ING Groep’s Latin American pension business. Grupo Sura, as the company is known, is expected to complete the purchase by the end of this month.
In October, Bank of Nova Scotia bolstered its presence in Colombia with a $1 billion purchase of a 51% stake in Banco Colpatria, the Andean nation’s fifth-largest financial group.
Grupo Santo Domingo owns and operates television and radio stations in Colombia, as well as printing firms, beverage businesses, automotive and other businesses.
The holding company, whose patriarch, Julio Santo Domingo, died earlier this year at the age of 87, in recent times sold many of its core businesses. It sold a controlling interest in Colombia’s flagship airline Avianca in 2004 to a Brazilian businessman, German Efromovich. In 2005, it sold control of Bavaria, Colombia’s biggest brewery, to South African brewer SABMiller.
The conglomerate is now run by Julio Santo Domingo’s son, Alejandro Santo Domingo.
Wednesday afternoon, CorpBanca’s Santiago traded shares gained 3.4%, to 6.85 pesos ($0.01).