Bloomberg News

Colombia to Liquidate Interbolsa Brokerage After Cash Crunch

November 07, 2012

Colombian authorities will liquidate Interbolsa SA (INTBOL)’s brokerage, the country’s biggest, after attempts to find buyers for the cash-strapped company failed, Finance Minister Mauricio Cardenas said.

Regulators hadn’t been able to sell or merge the brokerage or find an alternative to liquidation, Cardenas told reporters in Bogota. Winding down the operations will avoid disruptions in local debt markets, he said.

Colombian authorities are shoring up trading by providing liquidity and arranging for Bancolombia SA (BCOLO), the country’s largest bank, to assume control of Interbolsa’s local government debt operations. Regulators suspended trading in Interbolsa shares last week and seized its brokerage after it was unable to meet a payment on a 20 billion peso ($11 million) loan.

“The owners of the brokerage have looked for alternatives, they looked at clients that were interested in buying the brokerage, but it wasn’t possible to solve the situation in this way,” Chief Financial Regulator Gerardo Hernandez told reporters.

Banco de la Republica offered as much as 300 billion pesos in repurchase agreements today, accepting securities including corporate bonds as collateral.

‘Maintained Indefinitely’

The repos are being sold to “give liquidity to brokerages and prevent problems similar to the ones we are seeing today,” Hernando Vargas, a central bank official, told reporters. “The measure will be maintained indefinitely for as long as we consider necessary.”

The yield on Colombia’s peso bonds maturing in 2024 fell seven basis points, or 0.07 percentage point, to 6.18 percent at 12:51 p.m. in Bogota, the biggest drop on a closing basis since Oct. 19.

The central bank’s measure was “more than necessary” and will help to calm investors’ nerves, Camila Estrada, the head analyst at Helm Bank SA (PFBHELMB), said in a telephone interview from Bogota. “We are looking carefully to see what potential systemic risk there is.”

The financial squeeze was specific to Interbolsa and doesn’t represent systemwide weakness, Cardenas said in a Nov. 4 interview in Mexico City.

Interbolsa has been suspended from trading since Nov. 2, the day after tumbling a record 30 percent. The stock has fallen 58 percent in 2012.

The company also has a fund that had more than 2 trillion pesos of assets under management as of April, according to its website. Financial regulators said in a statement they are barring withdrawals until they hold meetings with investors.

To contact the reporters on this story: Christine Jenkins in Bogota at cjenkins28@bloomberg.net; Oscar Medina in Bogota at omedinacruz@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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