Macrofinanciera goes out on a limb and will become a bank in 2012

Friday, May 6, 2011

Colombian finance company Macrofinanciera, owned by Panama's Multibank, is waiting to receive the necessary approval from local financial services regulator Superfinanciera to become the country's 21st bank beginning next year.

Once it has this authorization, the company, which today specializes in remittances, will begin operating as Multibank Colombia, continuing its focus on this market as well as entering the factoring and payroll loan segments.

BNamericas spoke with Macrofinanciera chairman Iván Rodríguez about the reasons that led the bank to take that step and the opportunities it sees in the country's financial market.

BNamericas: Why did you decide to become a bank?

Rodríguez: Before deciding to set up in Colombia, Multibank looked at different options in South American countries. After analyzing economic growth and business opportunities, the bank found this country to be the best place to begin expanding to other markets.

BNamericas: How has Macrofinanciera's business developed recently?

Rodríguez: In recent years, we've been growing significantly, in an orderly manner, deepening our business relationships in four business areas.

Today we have 40 offices in Colombia, among which we have nine locations in different chain stores that we have partnerships with, to maintain and enhance accessibility for our customers and availability by having a Macrofinanciera office in the places they visit most.

BNamericas: In what segments are you planning to grow, and what will distinguish you from the competition?

Rodríguez: We will be a niche bank. This means we will continue the work we've been doing since about two years ago, when our activity took on a commercial approach.

We specialize in the monetization of workers' remittances, where we have a 15% share in a market that's worth US$4bn in Colombia.

We will keep working in that market, continuing our banking services projects through savings accounts, which to date total more than 20,000.

The second commercial activity we will prioritize is factoring, a business in Colombia that is beginning to grow with the support of new legislation that aims to increase its penetration to levels equivalent to Chile's factoring volume, which is nearly 12% of GDP.

The third commercial front is payroll loans, or consumer loans for public and private employees that are repaid by directly discounting the payroll.

BNamericas: What volume of business do you expect to achieve in the first year of operations?

Rodríguez: The bank expects to have more than US$180mn in assets and about US$140mn in deposits at the end of the first year. We expect to become one of the most important niche banks in Colombia.

BNamericas: What will the bank's funding strategy be?

Rodríguez: We will leverage our lending activities with certificates of deposit and savings accounts, without discarding the possibility of resorting to securitizations, debt issues and other more sophisticated ways of funding.

BNamericas: Do you have an estimate of the extent to which the investments needed to upgrade to a full-fledged bank will affect the company's bottom line?

Rodríguez: As a finance company we're currently generating profits, which will be affected in the short term by the significant investments that are being made to upgrade the technological platform to be a bank. We expect to break even again in 2012.

BNamericas: Could you consider using purchases to grow in Colombia?

Rodríguez: It's an option that isn't being ruled out if the market presents a good opportunity.

About the company

In 2004, Macrofinanciera absorbed Cambios Country to develop financial activities other than foreign exchange brokering. In 2007, Panama's Multibank purchased 70% of Macrofinanciera's common stock. It now owns 94% of the company.

Through its 40 branches nationwide, Macrofinanciera currently offers products and services such as certificates of deposit (CDTs), commercial loans, international and national remittances, and a foreign exchange brokerage.

As of end-February, Macrofinanciera had 165bn pesos (US$92mn) in assets and 13.2bn pesos in equity.