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MeneameHonduras' Banco del País (Banpaís) has acquired fellow local mortgage lender La Constancia for an undisclosed sum and aims to continue expanding through M&A, a Banpaís spokesperson told BNamericas.
The acquisition comes three years after Banpaís bought commercial bank Banco Sogerin in July 2003 in and armed forces financial institute Banco de las Fuerzas Armadas (Banffaa), in September 2003.
Banpaís plans to merge its existing bank with La Constancia, giving it combined assets of 14.9bn lempiras (US$790mn), equivalent to 10.2% market share.
It now ranks as the fifth player, leaving Bamer in sixth position with 9.7% of market share in terms of assets.
Banpaís loan book will increase to 9.00bn lempiras, or 11.7% market share, while deposits will grow to 10.0bn lempiras, equivalent to 10.9% of the deposit market.
There is still an authorization from banking watchdog CNBS pending to transfer assets and shares from La Constancia to Banpaís, an official from CNBS told BNamericas.
The regulator expects both institutions to send the request this week, which will receive immediate approval, the official noted.
WHAT IS BANPAÍS BUYING?
La Constancia, founded in 1977, operates as a deposit-taking financial institution that focuses on mortgage lending. As of June 30, it reported assets of 2.25bn lempiras and performing loans of 1.27bn lempiras. The past-due loan ratio stood at 8.9% at end-June.
Bad debts are not a major concern for Banpaís as it has experience managing troubled loan portfolios, the spokesperson said, referring to Sogerin and Banffaa' portfolios.
La Constancia posted losses of 13.7mn lempiras in the first half this year. The financial performance was affected by the failed deal with Central American banking group UBCI, known as the Cuscatlán group, which was supposed to take over La Constancia, the spokesperson said.
In January, UBCI announced it would acquire Honduras' insurer Compañía Aseguradora Hondureña (AHSA) and La Constancia as part of the same deal.
The acquisition of La Constancia is key for Banpaís as it gives the bank a leading position in the mortgage loan segment, the spokesperson said. The bank is seeking to grow retail lending, which currently accounts for some 30% of its loan book.
Banpaís' strategy relies on growing through M&A in order to strengthen its position within the local banking system and be able to face competition from international players, the spokesperson noted.
UK banking group HSBC (NYSE: HBC) will take over second largest bank Banco Grupo El Ahorro Hondureño (BGA) with an assets market share of 14.3% thanks to its upcoming acquisition of Panama's Grupo Banistmo.
HSBC's new acquisition ran a close second to Banco Atlántida, which claimed 15% of total banking system assets of US$7.8bn at end-June.
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