The Government is willing to sell Bancafé, the country's second financial entity, by means of a public auction, as part of Colombia's undertakings under an agreement signed with the International Monetary Fund (IMF).
Bancafé has always been one of the most appreciated assets of the Colombian coffee sector. However, in October 1999 due to various causes, the entity was taken over by the Guarantees Fund of Financial Institutions (Fondo de Garantías de Instituciones Financieras - FOGAFIN), when its shareholders were unable to inject fresh resources to save it.
Since then, the Colombian government has invested 1,1 billion pesos in its recovery and nowadays Bancafé holds 7.5% of the financial market collections and 8.2% of the sector's assets, as mentioned by the newspaper "El Espectador" in its edition of June 11, 2001.
Other economic information of Bancafé disclosed by the Colombian press indicates that the base price for the sale of Bancafé would be approximately Col$460,000 millions; the assets of the bank at the end of last April amounted to Col$183,262 millions, the solvency margin is 14% and the non-productive portfolio over a total of loans granted and in force is hardly 3.1%. The entity manages assets for Col$5,4 billions.
In addition, the Colombian government will assume the retirement pension liabilities of this financial institution amounting to Col$357,000 millions.
These figures put Bancafé in a very interesting position for purchasers who will find that the Colombian government is offering several advantages to whoever is interested in acquiring the financial institution.
The sale process must comply with the terms and conditions of privatisations under Colombian law, which includes an initial offer to the solidarity sector and the remaining shares to the private sector.
The sale process shall begin firmly next week and the base sale price shall be defined by the Council of Ministers between September and October of the current year.
This report was prepared and is copyrighted in 2001 by PARRA, RODRÍGUEZ & CAVELIER, a law firm with offices in Bogotá, Colombia. The general information herein contained does not constitute legal advice. Transcriptions and quotes are permitted citing the source.
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