Latin America Round-up

31/03/2006 | Emerging Markets Editorial Team

Heavy trading on the Bovespa; Bolivia demands a better price for its gas; Bancolombia set to buy itself bigger

The after-hours market of the São Paulo Stock Exchange (Bovespa) closed Friday on a 3.445 million reais volume ($1 = R$ 2.165), the result of 500 transactions.
Leading in terms of volume were preferred shares in steel company Gerdau (R$ 275,537). These were followed by common shares in online retailer Submarino (R$ 240,431), common shares in savings bank Nossa Caixa (R$ 239,500), preferred shares in leading private sector bank Bradesco (R$ 225,635) and preferred shares in Brazilian state run oil company Petróleo Brasileiro (Petrobras) (R$ 197,948).

Bolivian hydrocarbons minister, Andres Soliz Rada
, conditioned an increase in the volume of gas to the Brazilian market on a rise in price. Rada said that once a new price is decided, Bolivia will negotiate new contracts with Brazilian oil company Petrobras. Rada responded to the president of Petrobras, Sergio Gabrielli, who said that investments in Bolivia are paralyzed waiting on new rules for the sector. Bolivia has a contract with Brazil to sell 30 million cubic meters daily, but Brazil buys only 24 million cubic meters. However, Rada said that the Lula administration asked for a new contract worth 68 million cubic meters daily by 2010. Bolivia sells natural gas to Brazil for $3.4 per million units.

Increased capital will permit Colombia's largest bank, Bancolombia,  to continue acquisition-driven growth, US investment bank UBS said in a report.
Bancolombia's capital ratio stood at 10.9% at the end of last year and the bank is targeting a 12.5% ratio in the medium term.
Future purchases could be both niche or large, UBS said. The bank failed in its recent 733 billion peso ($321million) bid for Megabanco, but the government's likely sale of Granbanco-Bancafé will provide a new opportunity.
Expansion could also take place abroad, UBS said. In an interview in January with BNamericas, Bancolombia CEO Jorge Londoño said the bank was looking for purchase opportunities to grow abroad as it already has a considerable share of the home market. Bancolombia commands a 20% market share in Colombia, measured by assets. 
Earlier in March, Bancolombia saw rival bank Banco de Bogotá win the auction for liquidated bank Megabanco with an 808 billion peso bid. Last month Fogafin hired UK investment bank Rothschild to decide Bancafé's fate. Rothschild is expected to finish its report in April.
UBS also reiterated its "buy" rating on Bancolombia due to Colombia~s strong economic performance, evolving financial system and reduced political risk.
Bancolombia saw its consolidated net income rise to 947 billion pesos ($421million) for 2005, up 18.2% compared to the previous year. The bank's largest shareholder is the Suramericana Group, a Medellín-based industrial group with activities in financial services, cement and food.

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