Banesco Plots CentAm Expansion

Banesco, Venezuela’s leading bank by assets, is planning to expand further into Central America after opening up shop late last year in Panama. “The next 10 years are going to be the golden decade of Central America,” Juan Carlos Escotet, Banesco’s president, tells LatinFinance. “We’re not looking at competing in Brazil, for example, although not because we’re not professionally capable, but because the capital demands are large,” Escotet explains. “It’s much more logical to target the Central American region.” After three years of strong economic expansion in Venezuela, growth is likely to continue at a slower pace over the medium term, suggesting the outlook for domestic banks is deteriorating, according to Fitch. With this in mind, Banesco is being proactive in its overseas growth. Escotet says Banesco examined the possible acquisition of two banks, in Costa Rica and Guatemala, but in the end opted to install and develop its own banking model – a move far less costly than undertaking acquisitions. Banesco used its own capital to fund the opening of a full retail bank in Panama last year. It has operated an international bank in Panama since the mid-1990s, and has small operations in Florida and Puerto Rico. Panama was the place of choice to expand, Escotet says, because Banesco already had a footprint there and because the country has become a key destination offshore for funds belonging to Venezuelan high-net-worth individuals. Banesco’s Panama operation held $704 million in assets at the end of 2007, and made a net profit of $8.7 million. At the end of 2007, Banesco had total assets of $12.88 billion equivalent in bolivars – up 51% in a year.