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Banco de Comercio Exterior de Colombia S.A. (BANCOLDEX)

Major Rating Factors

Strengths:

  • Fulfills a major policy objective for the government of Colombia.

  • Receives strong government support.

  • Has exhibited a strong financial performance since its inception, with good

asset quality, solid capitalization, and continued profitability.

Counterparty Credit Rating

Foreign Currency BB+/Stable/--

Weaknesses:

  • Continued challenges resulting from its broadened mandate to support small and midsize enterprises (SMEs) and

microcredits.

Rationale

The rating on Banco de Comercio Exterior de Colombia S.A. (BANCOLDEX), the Republic of Colombia's state-owned development bank, reflects the support of the sovereign and the bank's record of good financial performance since its inception in 1992. The bank is 99.7%-owned by the Colombian government (with the remaining portion owned by the private sector), and it will likely remain under almost full governmental control, at least over the medium term.

The bank plays a key role in meeting the government's objective of promoting exports, industrial competitiveness, and the growth of SMEs and microcredits. The government is not involved in the daily management of the bank but has strong oversight of its activities, and has administrative mechanisms in place to monitor the bank's performance and respond in a timely manner in periods of stress. The government does not provide a direct guarantee on the bank's debts, except on debt incurred from multilateral creditors.

In 2003, BANCOLDEX formally took over a large part of the assets and liabilities of state-owned Instituto de Fomento Industrial (IFI), which ceased operations as part of the government's strategy to rationalize the public-sector financial system. As a result, BANCOLDEX's role was changed from dealing strictly with export finance and promotion to more broadly supporting SME development, and it now plays a central economic policy role in promoting and supporting the activities of the country's SMEs. BANCOLDEX provides wholesale credit at attractive rates by financing loans through private financial intermediaries, and the bank remains the government's key vehicle for supporting SMEs.

BANCOLDEX's management has effectively guided the bank through Colombia's changing financial system, and it has maintained the strong asset quality, capitalization, and profitability that have characterized the bank since its inception. The bank's credit quality has remained stronger than that of Colombia's overall financial system.

Standard & Poor’s | RatingsDirect on the Global Credit Portal | January 26, 2010

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