Bancolombia Falls After $2.1 Billion HSBC Panama Deal

Bancolombia SA, Colombia’s largest bank, fell for a second day in Bogota trading after agreeing to pay $2.1 billon for HSBC Holdings Plc’s Panama unit in its biggest-ever acquisition.

The company’s preferred shares, which are more actively traded than the common stock, fell 2.5 percent to 29,920 pesos at 12:23 p.m. It was the second-biggest loser today on the country’s benchmark Colcap Index, which fell 0.8 percent.

The acquisition is the second Bancolombia has announced in Central America in two months. The shares have fallen 5.1 percent from this year’s high of 31,460 as analysts including Banco Santander SA’s Boris Molina and Luis Guzman speculated that the company may have to sell equity to pay for acquisitions and meet regulatory capital minimums.

“The stock is responding to the expectation that they’ll have to sell shares, even if they’re not running to do it,” Katherine Ortiz, an analyst at Corredores Asociados SA, said in a telephone interview from Bogota.

The stock plunged 3.2 percent on Feb. 11 after the bank said it would propose a sale of preferred stock at an annual meeting in March.

Bancolombia Chief Executive Officer Carlos Yepes told reporters on a videoconference today that the acquisition will create the biggest financial group in Central America. In December Bancolombia agreed to pay $216 million for a stake in a Guatemalan bank through Agromercantil Holding.

The bank doesn’t need to sell shares to raise cash for the acquisition, Yepes said.

“We have the capital and we have the liquidity,” Yepes said from Medellin, where the bank is based. Reporters in Bogota watched from a Bancolombia office in the city.

The share proposal would give the bank standing approval to “keep on issuing” capital at any time this year or next, Yepes said.

The cash price for Panama’s second-biggest bank is three times the unit’s net asset value of $700 million, HSBC said today in a statement.

“The multiples are a little bit above what we’re used to seeing for deals in the region,” Ortiz said. “But it’s one of Panama’s leading banks and its delivered good results, and that could all justify paying a higher price.”

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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