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Thursday, September 19 2019 @ 02:10 am EDT

Banistmo affirms intention to enter Guatemala by 2007

Money Matters Panama-based banking group Grupo Banistmo still plans to enter Guatemala before year-end 2007 after closing a major acquisition in El Salvador earlier this month, the group's executive VP of banking operations Juan Carlos Fábrega told BNamericas. "We have set the goal of consolidating our regional leadership, and entering Guatemala before 2007 forms part of our strategic plan because it is a large market with very good opportunities," Fábrega said in an emailed statement. Banistmo has steadily grown over the last three years through acquisitions and startup projects to become Central America's largest financial group with over US$8bn in assets. Earlier in Feburary Banistmo paid US$131mn for a 53.7% stake in El Salvador's third largest banking group Inversiones Financieras Bancosal. Today the group has banking operations in Panama, Honduras, Costa Rica, El Salvador, Nicaragua and Colombia. However, Banistmo is still absent from Guatemala, the region's largest market with 12.1 million people and a US$30.7bn economy. Banistmo CEO Alberto Vallarino told BNamericas in an interview last September he wanted to make large acquisitions in El Salvador and Guatemala rather than smaller transactions or startup projects as part of the group's plan to have a presence in every Central American country by 2007.

Guatemala's fragmented financial sector, home to 26 banks, has been slow to consolidate given the high asking price demanded by bank owners. Talks between Central America's second largest financial group Grupo Cuscatlán and the third largest private bank Banco del Café in 2004 ended over price.

Guatemalan daily La Prensa Libre reported in January that the country's top banking group Corporación BI, Panama-based BAC International Bank and Banistmo are vying for a controlling stake in the fifth largest private bank, Banco de Occidente.

Occidente executives have declined to return repeated phone calls by BNamericas seeking comment. The bank reported 4.46bn quetzales (US$586mn) in assets and equity of 456mn quetzales at year-end 2005.

Market observers say Banistmo could still have some financial firepower left for another acquisition given it was prepared to pay up to US$146mn for 60% of Bancosal. Banistmo paid for that deal with a bridge loan from US-based Wachovia Corp (NYSE: WB), which will be replaced through capital increases and issuing debt, Fábrega stated.

Fitch ratings on February 9 affirmed Banistmo's ratings given it will be able to maintain its 15% capital ratio target following the Bancosal deal as well as the group's successful acquisition track-record in Costa Rica and Honduras.

By Ken Parks

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