Fitch: Bancolombia's USD1.3B Capital Increase Helps to Recover Capital After Regional Expansion

NEW YORK & BOGOTA, Colombia--()--Fitch Ratings views positively Bancolombia S.A.'s recent capital increase. Bancolombia (rated 'BBB/F2'/Stable Outlook) has raised COP2.6 trillion (about USD1.3 billion) in a public offering of preferred shares.

The increase recovers part of the capital deployed for the acquisition of HSBC's banking and insurance operations in Panama and has no impact on the ratings of Bancolombia and/or its subsidiaries. The acquisition created additional goodwill on Bancolombia's books, negatively impacting its Fitch core capital ratio (FCC), which is partially recovered with this recent capital injection.

Bancolombia's FCC had hovered around 10% until 2011 and was bolstered above 11% prior to the acquisition. Fitch expected FCC to decline below 9% at the closing of the transaction in October 2013 and assumed that positive prospects in the bank's two main markets, continued profitability and moderate organic growth would allow Bancolombia to replenish its capital and bring FCC closer to 10% by the end of 2015.

The successful share issuance strengthens Bancolombia's FCC and will support current and future balance sheet growth. Bancolombia's FCC ratio increased to close to 11% after this capital injection and, as the bank grows, is expected to remain in the 10%-10.5% range, a level aligned with other similarly rated banks. Fitch expects that the bank will maintain its conservative earning retention policy and controlled expansion in order to further enhance the bank's position and creditworthiness.

The bank is in the process of integrating Banistmo (rated 'BBB/F2'/Stable Outlook) and has also acquired a non-controlling interest in Banco Agromercantil in Guatemala (rated 'A+(gtm)/F1(gtm)'/Stable Outlook). Fitch will continue to monitor Bancolombia's new subsidiaries' performance and their impact on the bank's prospects and credit metrics.

For further information on Bancolombia's ratings, please refer to Fitch's press release entitled 'Fitch Affirms Bancolombia at 'BBB'; Outlook Stable' dated Sept. 19, 2013.

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
Primary Analyst:
Diego Alcazar, +1-212-908-0396
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Andres Marquez, + 57 1 326-9999
Director
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Diego Alcazar, +1-212-908-0396
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Andres Marquez, + 57 1 326-9999
Director
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
elizabeth.fogerty@fitchratings.com