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Grupo Aval's Q2 profit jumps 19.3%; Colombia plans state holding company

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Grupo Aval's Q2 profit jumps 19.3%; Colombia plans state holding company

* Grupo Aval Acciones y Valores SA booked net income attributable to owners of the parent of 813.2 billion Colombian pesos in the second quarter, up 19.3% from 681.5 billion pesos in the year-ago period. The bank's net interest income improved 4.9% to 2.831 trillion pesos, while net income from commissions and fees ticked 12.4% higher to 1.347 trillion pesos.

* Colombia's government plans to invest 700 billion Colombian pesos to set up a holding company under which various state-run financial institutions will operate, El Tiempo reported, citing a government source. State-owned firms that could fall under the new holding company include Banco Agrario de Colombia SA, Arco Grupo Bancóldex SA, La Previsora SA Cia de Seguros and Positiva Compañía de Seguros SA, among others.

MEXICO AND CENTRAL AMERICA

* The Mexican economy ministry's preliminary estimate for foreign direct investment in the country is about $18.10 billion in the first half of 2019, Reuters reported. The estimate compares to $21.5 billion of foreign direct investment in the first half of 2018.

BRAZIL

* Banco do Brasil SA expects to book some 260 million reais in extra payout expenses tied to its workforce reduction program. The plan, which was approved in July, resulted in the dismissal of 2,367 employees, or roughly 2.5% of its workforce based on the company's total headcount of 96,168 at the end of June. The downsizing will result in an estimated 490 million reais worth of annual savings, beginning in 2020.

* Brazil's government has transferred control of the Financial Activities Control Board, which keeps a check on criminal activity such as money laundering, to the central bank from the economy ministry, Reuters reported.

* Brazil's government announced a new inflation-adjusted mortgage credit line to be offered by state-run Caixa Econômica Federal, Diário Comércio Indústria & Serviços reported. Caixa President Pedro Guimarães said the bank expects to disburse at least 10 billion reais of the new loans over the next 12 months, adding that it has identified demand of at least 30 billion reais, Valor Econômico reported. Banco Bradesco SA said it would also offer inflation-linked mortgage loans if there is sufficient demand, Reuters reported.

* Business leaders in Brazil and staff at Banco Nacional de Desenvolvimento Econômico e Social have criticized the state-run development bank's decision to publish details of 134 subsidized loan contracts for the purchase of private jets, saying the move was an attack on the political rivals of President Jair Bolsonaro, Folha de S.Paulo reported. BNDES recently published the details on its website after the bank's chief promised to open the bank's so-called "black box," a term Bolsonaro has used to refer to the bank's loan portfolio.

ANDEAN

* RCI Colombia SA Compañía de Financiamiento said it plans to offer 300.00 billion Colombian pesos of bonds carrying a term of between two and five years. Proceeds will be used to restructure the company's debt and for working capital.

* Luis Palomino Reina, the former chairman of troubled state-run Peruvian bank Banco Agropecuario, sent a letter to the government in May saying that key documents related to the bank's financial management between 2011 and 2017 had been lost, Gestión reported. Congress ordered an investigation into the bank's management in 2018 amid mounting losses and a spike in nonperforming loans. The lost documents may delay the probe and broaden its scope to include their disappearance.

SOUTHERN CONE

* Shareholders of Scotia Administradora General de Fondos Chile SA approved the company's absorption of affiliate Scotia Azul Asset Management Administradora General de Fondos SA. Shareholders of Scotia Azul AGF will receive 200 Scotia AGF shares for each share they own.

* Fitch Ratings analyst James McCormack said Argentina might be headed toward a sovereign debt restructuring although an Argentine default is still unlikely, El Cronista reported. "In the past, when other countries had similar adjustments in the exchange rate, a debt restructuring was often needed, although there is no immediate correlation," he said. "There were 16 cases in history with adjustments of this magnitude and five needed to restructure their debt."

* S&P Global Ratings lowered the long-term issuer credit ratings of Banco de Galicia y Buenos Aires SAU, Banco Patagonia SA and Banco de la Provincia de Buenos Aires to B- from B, with a negative outlook, following its recent downgrade of Argentina's sovereign credit ratings. The banks are not immune to adverse market conditions in Argentina, including currency devaluation and skyrocketing interest rates, the rating agency said.

* Argentine central bank chief Guido Sandleris warned that August and September will bring increased inflationary pressure in the wake of recent volatility and efforts to contain its impact on currency depreciation. The Argentine peso, which fell around 24% last week, is still competitive, which gives the regulator "more confidence to make interventions," he said at a press conference.

* Argentina's Treasury on Aug. 20 paid about US$2.62 billion to cancel repo loans it had obtained from international private-sector banks, sources familiar with the matter told El Cronista reported. The government decided to act after a sharp fall in the value of Argentine sovereign bonds that functioned as a guarantee on the loans.

IN OTHER PARTS OF THE WORLD

* Middle East & Africa: Banque du Caire to sell stake by 2020; Ghana's finance sector cleanup continues

Helen Popper contributed to this article.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.

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