Published: - Jan 29, 2019

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A growing wave of Colombian banks has reached Central America for almost a decade and now constitutes the highest foreign investment in the region.

Since the first decade of this century, Colombian banking has grown steadily and has been projected into the future, which has led to the growth of its investments both nationally and internationally.

Leer en español: Los bancos en Centroamérica ahora son colombianos

In an editorial note from the Republic Bank published in 2013, which analyzed the internationalization of Colombian banking in the period 2006-2012, the conclusions are clear: the Financial Superintendency identified 29 subordinated companies in 2006, that is, 29 companies of banking that respond to a Colombian matrix.

While for 2012, 163 were identified, of which 103 were located in Central American countries such as Panama, El Salvador, Costa Rica, Guatemala, Honduras, and Nicaragua.

From the complicated economic circumstances that were experienced in 2008 throughout the world, regional economies began to activate and diversify, in this case, allowing the entry of foreign actors to Central American countries, more specifically Colombia.

A necessary expansion

According to the Report on the Banking System of Central America, the Dominican Republic and Panama for 2016, Colombia is one of the largest investors in Regional Banks. Central America's bank, with a presence in all countries of the Central American Monetary Council, except in the Dominican Republic, has capital that comes from Colombia.

In the same way, it happens with Davivienda and Bancolombia banks, who operate under other names, but their capital is Colombian. This increase has caused historical investors in the region such as the United States and Canada to be displaced, having fewer and fewer subordinate companies in these countries.

According to the expert Camilo Herrera, in conversation with BBC Mundo, this expansion of Colombian banking is a natural consequence where several factors are grouped. On the one hand, Colombian banks should continue to increase according to their projections, however, doing so within their borders would have led them to a case of financial monopoly.

On the other hand, although Colombian banks have proven to be stable and with projection, they still do not have the economic power to enter to compete in stronger markets such as Brazil but to position themselves in Central America and look to the future. possible markets such as Ecuador or Bolivia.

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Colombian banks lose territory in their own country

It is interesting, however, that within Colombia the presence of international banking is quite high, competing strongly with the national presence, both in clients and inequity and profits. These banks include the presence of big names at the international level, such as the Spanish BBVA, the Canadian Scotia Bank, who recently acquired the regional bank Colpatria, or the presence of a strong Brazilian neighbor, Itaú.

According to the data provided by Valora Analitik, despite the fact that Banco de Bogotá, Bancolombia and Davivienda are the most profitable banks within Colombia, the same ones that have a greater presence in Central America, the aforementioned internationals report a slightly better balance in their operations. Therefore, while Colombian banks position themselves in Central America, they must still compete strongly for a place in their own country.

LatinAmerican Post | Jorge Ovalle

Translated from: 'Los bancos en Centroamérica ahora son colombianos'