Citigroup to buy Central American bank for $1.51 billion
Citigroup Inc. (C.N: Quote, Profile , Research) said on Wednesday it agreed to acquire Central American commercial and retail bank Grupo Cuscatlan for $1.51 billion in cash and stock to further expand in Latin America.
Grupo Cuscatlan is based in El Salvador and has operations in Guatemala, Costa Rica, Honduras and Panama. It had about $5.4 billion of assets, $3.5 billion of loans, and $3.4 billion in deposits as of September 30.
The deal is expected to close in early 2007 and is subject to regulatory approval.
In October, Citigroup agreed to acquire Grupo Financiero Uno (GFU), the largest credit card issuer in Central America.
"We see a lot of potential in the region," Manuel Medina-Mora, chairman and chief executive officer of Citigroup Latin America & Mexico, said in an interview.
Asked if Citigroup would seek more deals in Latin America, Medina-Mora said Citigroup would combine organic growth in the region with target acquisitions.
"This combination should continue to be the way we go forward … we will of course keep our options open if there is an interesting acquisition to be made in some of the regions in which we see most potential."
Grupo Cuscatlan has more than 45,000 corporate clients and 1.2 million retail customers through a network of 202 branches in Central America. It has about 5,000 employees.
"This transaction complements our recent acquisition of Grupo Uno and, taken together, these transactions quickly and significantly strengthen our distribution capabilities and product offerings to serve retail and corporate clients in Central America," said Citigroup’s CEO Charles Prince.
Citigroup is focusing its acquisitions on emerging markets where growth is fast, and the bank can be more than a marginal player without paying excessively for assets.
Last month, Citigroup led a team of investors that won control of China’s Guangdong Development Bank with a bid of 24.3 billion yuan ($3.1 billion).
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Citigroup is now present in 24 Latin American countries.
Medina-Mora said that over the past three years in Latin America, Citigroup has grown its revenues at about 15 percent on a compound annual basis.
He said this marked the potential of Latin America, emerging markets and the broader international business for Citigroup.
"That is exactly in line with the strategy that Chuck Prince has announced of becoming a more international financial group."
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