Argentina's Comafi authorized to absorb Banco BC
Argentina's central bank has given Banco Comafi the green light to merge with and absorb Banco BC, which was formerly the local unit of German lender Deutsche Bank.
Comafi, after acquiring the business in August last year for US$45mn, changed the unit's name to Banco BC while authorities considered the absorption request.
"Both entities will be completing the pending steps to finalize the merger process in accordance with the general companies law and the rules of the national securities commission as quickly as possible, " state news agency Télam quoted Banco Comafi manager Horacio Lovati as telling the Buenos Aires stock exchange.
Deutsche Bank had announced at the end of 2015 its intention to pull out of Argentina and nine other countries as part of a global strategy.
In a July report, rating agency Moody's said it considered the transaction positive for Comafi, citing the impact of the inclusion of Deutsche Bank's demand deposits on Comafi's cost of financing, among other factors.
Earlier this year, Aaron Freedman, associate managing director, Latin American banks at Moody's said M&A activity is likely in the country: "We expect to see some activity in Argentina. We think there's a lot of opportunity there. There's a lot of concentration at the top. There's actually a very large number of smaller banks in that country. To really take advantage of the opportunities that we expect to see in that country, banks are going to need to get economies of scale to be able to compete more effectively against the larger players.
"There may be scattered opportunities in other parts of the region. I think [Argentina] that's where we're most likely to see activity. But even there I don't know if we're going to be talking about a gold rush."
Comafi reported net earnings of 192mn pesos (US$11mn) for the first half of the year, compared with 411mn for the 12 months through June 2016.
At the end of June, according to central bank data, Comafi was the country's No. 20 bank by assets (23.4bn pesos), No. 18 bank by loans (12.0bn pesos), No. 21 bank by deposits (17.4bn pesos) and No. 22 bank by net equity (2.17bn pesos). There were 78 financial entities listed as operating at end June.
At the end of March, Deutsche Bank's local unit had 3.11bn pesos in assets. Loans to the private commercial sector accounted for 100% of the Deutsche Bank unit's loan portfolio.
Publicly traded, Comafi offers a wide range of financial services for individuals and companies. It began operating in 1985.
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