HSBC retrenches in Latin America with Panama sale
Baku, February 21 (AZERTAC). HSBC Holdings HSBA.LN +0.56% PLC Tuesday said it is selling its Panama business to Bancolombia SA CIB +0.15% for $2.1 billion, as the British bank narrows its focus in Latin America amid a larger effort to shrink its global footprint and exit from lower-growth countries. The deal also marks the continued expansion of Bancolombia in Central America. The Medellin, Colombia, lender already ranks as one of the largest financial institutions in Panama, an important trade and banking hub for Latin America, and is already present in Guatemala and El Salvador. "Colombian banks wanted to have a strong presence in Central America for a long time, but HSBC got there first," said Daniel Nino, director of Bogota-based economic research firm Pyxis-Economica. "The retreat of HSBC was a tremendous opportunity and Panama was always the crown jewel for banking in Central America." Panama, a dollarized economy expected to grow about 9.5% this year, long has had the strongest financial sector in the region and has been a favored destination for wealthy Latin Americans to place their money. HSBC Bank (Panama) SA has around $7.6 billion in assets. HSBC Latin America Chief Executive Antonio Losada said the British bank now will concentrate on its core markets in Latin America: Brazil, Mexico and Argentina, after a series of disposals in other countries. Colombian financial groups have been the main buyers for HSBC`s assets in the region. An HSBC spokesman said the money raised from the all-cash transaction will be redeployed into "priority growth markets." The global financial-services company has sold or closed 46 businesses around the world since Chief Executive Stuart Gulliver laid out a new strategy for the bank in May 2011. The strategic overhaul involves cutting costs and concentrating on high-growth markets. Latin America contributed around 9% to HSBC`s pretax profit in the first half of 2012. Brazil is the bank`s fourth-biggest contributor after Hong Kong, Canada and India. HSBC entered Panama in 1972, obtained a banking license the following year and went on to build an extensive branch network through three major acquisitions between 2000 and 2006. Bancolombia is Colombia`s largest lender by assets, and since 2006 it has been expanding its operations in Central America. The bank started its international expansion with a purchase in El Salvador and has continued to nab banks in other countries in the region. Carlos Raul Yepes, Bancolombia`s chief executive, said at a news conference from Medellin that the purchase will be funded with its own resources. The bank is seeking the approval of shareholders in March to carry out a preferred-share sale, but Mr. Yepes said the offering wasn`t needed to pay for the purchase in Panama. Bancolombia is a pillar of a conglomerate known in Colombia as the Antioquean Syndicate, named for the region of Medellin, which has dominated the country`s business for decades.
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