The chief executive of Colombian bank Banco Davivienda SA said Tuesday its planned purchase of HSBC Holdings PLC’s businesses in Central America will grow the company by 20% and help it meet its goal of listing its shares on Wall Street by the end of this year.
HSBC earlier in the day announced it was selling its Costa Rica, El Salvador and Honduras assets to Davivienda–Colombia’s third-largest lender by assets–for $801 million, as it continues to whittle down its portfolio of global retail banking assets.
At Sept. 30, the three businesses consisted of 136 branches across the three countries, and held approximately $4.3 billion of assets and $2.5 billion in loans, HSBC said.
Davivienda CEO Efrain Forero told reporters that by taking on HSBC’s Central American assets, Davivienda will increase its portfolio by 30 trillion pesos ($16.5 billion).
Forero said Davivienda’s net worth totaled COP4.8 trillion ($2.6 billion) at the end of last month, giving it the “financial muscle” it needs to make the purchase.
The bank “has the financial standing and necessary resources to make this transaction,” he said, adding that by the end of 2012 the company will be ready to list its shares in New York as American Depositary Receipts.
Analysts agreed with Forero’s assessment of the bank’s ability to pay for HSBC’s assets.
“The assets acquired represent 20% of total assets held by the bank in Colombia and we believe that the bank has the funds to close the transaction,” said analysts at Colombia’s biggest brokerage, InterBolsa. “An ADR registration process would be in line with the bank’s interest to expand its participation in international markets, a condition that is attractive to existing shareholders.”
Forero also said the company’s shareholders should rest assured that while the bank’s planned purchase of HSBC’s assets in Central America could generate some “movements” in the share price temporarily, he said it should ultimately create more demand for Davivienda shares.
Tuesday morning in Bogota, Davivienda’s preferred shares were 1.3% lower at COP20,420, while the overall market index was down 0.4%.