Highly commended Latin American deal of the year 2013: Bancolombia

By:
Rob Dwyer
Published on:
Bancolombia´s acquisition of 95% of HSBC Bank Panama
Advisers to the acquirerUBS and Bancolombia
Advisers to the targetGoldman Sachs and HSBC
return to the Deals of the Year 2013 index

The sale of HSBC Bank Panama to Bancolombia was one of the largest M&A deals of the year and was transformative to the financial services industry in the fastest-growing economy in Latin America. The deal value was $2.1 billion based on estimated 2012 price to book value of 3.0x and 2012 estimated P/E of 16.9x. HSBC Panama was the second-largest bank in Panama, with a 17% market share in loans, 16% in deposits and 5% in insurance premiums. With the acquisition, Bancolombia adds total assets of $7.6 billion, deposits of $5.8 billion and shareholder’ equity of $800 million to its Panamanian operations to create a presence in a very attractive economy and banking industry. It also further enhances the movement of Colombia’s biggest banks northwards as they seek regional expansion and diversification. Bancolombia becomes the largest bank in Panama and central America and is expected to double the contribution of international earnings to about 20% of total.

Meanwhile the deal marks progress in HSBC’s Latin American withdrawal into key markets. The bank aims to reduce costs and boost margins through focusing on regional markets that can best leverage its international presence. The deal with Bancolombia follows the sale of its Chilean retail operations to Itaú in 2011, its operations in El Salvador, Honduras and Costa Rica to Banco Davivienda in December 2012 and its Colombian, Paraguayan, Peruvian and Uruguayan businesses to GNB Sudameris in May 2012.