Banking and the parallel
development in Colombia
Jornada Colombiana, University of St. Gallen
March 28, 2017
Andrés Felipe Marín Salazar
Vice-President
Head, Private Banking Colombia & CA, Credit Suisse
Agenda
I.
Development of banking in Colombia
II. Banking today and its main trends
III. Peace process, tax reform and banking in
Colombia
IV. Final remarks
1
Overview of banking in Colombia

Financial system started to grow in the 1950s with specialized
entities, e.g. Banco Cafetero, Banco Ganadero

Sector adapted strong AML regulations in the 1980s

In the 1990s, the banking system took a turn to an universal
banking system centred in commercial banks

Foreign investment in the financial sector and the financial crises
in the 1980s and late 1990s (La Crisis de Fin de Siglo) led to
closures and M&A that facilitated the consolidation of today’s
banking system

Banking today: solid and efficient with less entities, regulated and
supervised, gaining public trust
Banking today and its main trends

4 financial institutions dominate the sector





() coverage in Colombia and abroad


LATAM (El Salvador, Panama, Costa Rica, Peru) and North America
() number of players – entering of foreign financial institutions


Grupo AVAL (ca. 29%)
Bancolombia (ca. 21%)
Davivienda (ca. 12%)
BBVA (ca. 11%)
Banco Itau, Banco de Crédito del Peru, Citibank
Banking and financial sector contributed the most to the GDP’s growth in
2016 – 5% growth
Banking today and its main trends

() wealth – more HNWI / UHNWI leading to higher demand of
PB services

Consolidation of the industry’s main players

() private consumption / lending


Household consumption will likely continue to provide the biggest
support for real GDP growth
() opportunities for M&A
Source: DANE, Central Bank, Credit Suisse
Source: DANE, Central Bank, Credit Suisse
Figure 4:
Source: DANE, Central Bank, Credit Suisse
Source: DANE, Central Bank, Credit Suisse
Peace
process
Tax
reform
Strengthening the future of
the banking system in
Colombia?
?
Peace process, tax reform and banking in
Colombia
Peace process





Reallocation of resources
(governmental and private
expenditures)
Tax reform

Structural tax reform (OECD
recommended)

Contributes the funding of
current fiscal deficit of 4%

Increase of involvement of
international financial
institutions (e.g. WB, IDB, IMF)
Tax benefits for foreign
investments

More lending opportunities for
rural development and postconflict agreements
Financial sector directly
involved in the implementation
of tax reform

Less foreign debt in terms of
GDP for this and next year
Increase of private foreign
investments
Robust labour dynamics
Final remarks

A successful implementation of both processes could foster the
continuous development of the banking system in Colombia and
its expansion within Latin America

At the same time, the banking system will be an important
channel for the implementation of both processes

The banking industry in Colombia will work closely with the
government in order to offer a more democratized process for
lending to low-income households and “desmovilizados”.

With the implementation of the tax reform in 2017, it is expected
that the government meets its target fiscal deficits of 3.3% of GDP
this year and 2.7% of GDP in 2018.
Thank you for your attention
Andrés Felipe Marín Salazar
Vice-President
Head, Private Banking Colombia & CA, Credit Suisse