Colombia’s Finance Minister said the country’s biggest brokerage firm will be liquidated after risky investments and overzealous expansionism put the company in critical condition.
The fate of InterBolsa SA has hung in the balance for over a week, but after attempts to find buyers for the international financial institution failed, word came down from Finance Minister Mauricio Cardenas on Wednesday that InterBolsa will be liquidated.
The governmental financial institution in charge of auditing InterBolsa, ‘The Guarantee Fund of Financial Institutions’ or Fogafin, declared there were “no viable alternatives for [InterBolsa] to continue operation.”
“Winding down the operations will avoid disruptions in local debt markets,” said Cardenas.
Last week, market regulators suspended trading of InterBolsa stock and seized the company’s brokerage wing after it was unable to meet a payment on an $11 million loan. The regulatory actions resulted in InterBolsa stock falling a record 30% in one day. The stock has fallen 58% in 2012.
Colombian authorities are arranging for Bancolombia, the nation’s largest bank, to assume control of InterBolsa’s local government debt operations.
The central bank’s measure was “more than necessary” and will help calm investors’ nerves, said Camila Estrada, the head analyst at Helm Bank SA.
“We are looking carefully to see what potential systematic risk there is,” Estrada continued.
“The financial squeeze was specific to InterBolsa and doesn’t represent systemwide weakness,” Cardenas said on Sunday.
Fogafin director, Maria Ines Agudelo, reiterated on Wednesday what Colombian President Juan Manuel Santos and other government officials have said for more than a week, that all of InterBolsa’s investors are protected.