Fogafin aims to sell 10 financial institutions in 2006

Thursday, February 9, 2006

Colombia's deposit insurance fund Fogafin expects to sell at least 10 financial institutions currently subject to liquidation proceedings this year, Fogafin head Andrés Flórez told BNamericas.

The government's industrial development institute IFI and Caja Agraria, whose loan portfolio was later handed to state-owned Banco Agrario, and Banco Andino are among these banks, Flórez said.

According to Flórez, Fogafin supervises the liquidation processes of some 45 financial institutions in Colombia, all of which will go under the hammer in future.

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Colombian banks have been moving forward after the solvency and confidence crisis that almost toppled the banking system in 1999, he said. Fogafin at the time supported struggling banks with US$2.5bn, which they have been paying off since.

Evidence of this upbeat feeling is the upcoming sale of intervened commercial bank Megabanco and state bank Bancafé, Flórez said.

Fogafin earlier this week hired UK investment bank Rothschild to decide Bancafé's fate. Rothschild is expected to finish its report in April, Flórez said.

"I cannot forecast what that report will say. Maybe we will not even have to sell the bank, but it is still too soon to tell. Over the last years the bank has undergone serious improvement and cleaning. Today Bancafé is overcapitalized and will post a 110bn-peso (US$48.6mn) profit for 2005," he said.

Bancafé is Colombia's largest state-run bank and the third largest financial institution in the local banking industry, with a branch network of 240 offices.

Fogafin and Colombia's regulator for banking cooperatives are likely to sell liquidated microlending bank Megabanco in this year's first half, Flórez said.

Megabanco's largest shareholder, local cooperative bank Central Cooperativa Coopdesarrollo, was intervened last October due to liquidity problems.

Flórez also slammed press reports that Megabanco had already been sold to the local Gilinski family, the controllers of local bank Banco Sudameris Colombia.