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

of marketable securities.

The bank uses its own capital, internally generated funds, and peso-denominated debt attained in a 1993 debt-for-equity swap to fund peso lending. However, due to the dramatic rise in demand for peso funds, the bank was forced to limit these resources. As a result, it entered the local money markets for the first time in 1999. In June of that year, BANCOLDEX issued COP12.4 billion in peso-denominated CDs. Since then, the bank has continued to issue peso-denominated CDs and short-term notes; and, subsequently, it has become one of the most active local market issuers. At year-end 2008, BANCOLDEX had just over COP1 trillion in local-currency CDs and notes outstanding, in addition to COP1.4 trillion in local currency bonds. The bank's foreign-currency debt--mainly loans from external banks and some multilaterals--rose by 29%, to US$793 million (COP1.78 trillion) at the end of 2008.

BANCOLDEX benefits from its reliance on local markets. The bank enjoys a competitive advantage that allows it to issue domestic debt at lower rates and longer maturities than other financial institutions. As a result, the bank enjoys higher net interest margins in its peso-lending business.

Capital

Despite the significant expansion of its assets after it received a significant portion of IFI's assets in 2003 and the reduction of its capital as a result of its 1993 equity-to-debt swap, BANCOLDEX continues to be one of Colombia's most highly capitalized financial institutions. The bank had equity of COP1.3 trillion at year-end 2008, up from COP 1.27 billion at the end of the previous year. This represents an equity-to-assets ratio of 21%, down from 36% at year-end 2006 (due largely to loan growth). We believe that BANCOLDEX still has the ability to meet both the Bank for International Settlements' 8% minimum risk-weighted capital ratio and the Colombian banking superintendency's 9% requirement (see table 4).

Table 4 Banco de Comercio Exterior de Colombia S.A./Capital Statistics

  • --

    Year ended Dec. 31--

(%)

2008

2007

2006

2005

2004

Adjusted common equity/assets

21.03

26.28

36.31

32.74

29.26

Adjusted common equity/loans

23.56

29.35

43.94

38.24

32.82

Adjusted equity plus total reserves/loans

29.05

34.34

50.91

44.70

38.60

Adjusted total equity/assets

23.06

28.15

39.39

35.45

31.98

Adjusted total equity/loans(net)

25.84

31.44

47.67

41.41

35.87

Ratings Detail (As Of January 26, 2010)*

Banco de Comercio Exterior de Colombia S.A. (BANCOLDEX) Counterparty Credit Rating Foreign Currency Certificate Of Deposit Foreign Currency

BB+/Stable/--

BB+

Counterparty Credit Ratings History

07-Mar-2007

22-Feb-2006

Foreign Currency

BB+/Stable/-- BB/Positive/--

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

8

771152 | 300210593

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