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January 8, 2008 |
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BANCO DE COSTA RICA: Oscar Arias Initiates Merger Talks of Banks Costa Rican President Oscar Arias and the Ministro de la Presidencia Rodrigo Arias will meet this week with bank managers to discuss the proposed merger of three financial institutions: The Banco Nacional, the Banco de Costa Rica and the Bancredito, Inside Costa Rica reports. According to Guillermo Quesada, Bancredito's general manager, the merger meeting was in the works, saying that the plan would maintain each indivual bank's autonomy, creating entities that would provide services to their operations. Inside Costa Rica states that the corporations would provide administration of automated tellers, security, supply and other services, to the three banks. In addition, the proposed merger would remove the threefold services like: * individual computer centres maintained by the individual banks, * armoured vehicles, etc., * grouping those services into one, * cutting down on operating costs. The combined assets of the three banks, as of Sept. 30, 2007, has summed to US$9 billion, which is 50% of the market with a combined profit of US$122 million dollars, Inside Costa Rica relates. The merger is necessary to allow the state banks to confront the mounting competition from the megabanks that are in the region, William Hayden claims, general manager of Banco Nacional, the same paper says. Carlos Fernandez, Banco de Costa Rica's president, was unavailable for comment, Inside Costa Rica says. Banco de Costa, established in 1877, is Costa Rica's second largest bank with a local deposit market share of 20% as of June 2006. Banco de Costa has three local wholly owned subsidiaries in non-credit activities (securities brokerage, mutual fund and pension fund management). It also has a 51% stake (increased from 20% in 2005) in Banco Internacional de Costa Rica aka BICSA, a Panama-based trade finance and corporate bank established in 1976 (24% of the bank's consolidated loans at end-September 2006). The larger local peer Banco Nacional de Costa Rica (also state-owned) holds the remainder 49% stake in BICSA. Banco del Costa Rica offers a wide array of universal banking services to 1.2 million clients through its network of 178 branches and 267 ATMs. Around 77% of loans are to the corporate and commercial sectors, while the retail segment provides the remainder 23% (35% contribution in the bank's domestic operations). * * * As reported in the Troubled Company Reporter-Latin America on Dec. 11, 2007, Fitch Ratings has affirmed the Issuer Default Ratings and all other ratings of Banco de Costa Rica as: -- Long-term foreign currency IDR at 'BB'; -- Short-term foreign currency IDR at 'B'; -- Long-term local currency IDR at 'BB+'; -- Short-term local currency IDR at 'B'; -- Individual at 'C/D'; -- Support at '3'; -- Support Floor at 'BB'; -- National-scale long-term rating at 'AA+(cri)'; -- National-scale short-term rating at 'F1+(cri)'. |
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