Ultra Air was launched in 2020 by William Shaw, the former CEO of Mexican airline Interjet, who says that this airline will be a low-cost operator with an Airbus A320 fleet. Ultra Air is one of the many Latin American airlines that will make its appearance in the upcoming years. Apart from Ultra Air, Itapemirim Transportes Aéreos has already started flying in Brazil.

Even though Ultra Air has ambitious plans to fly before this year ends, it still has a long way to go. At present, the airline is going through a certification process with the Colombian authorities. He told the media, “We are working at full speed in our certification process, and we’re advancing at a satisfactory rate. In a short period, we will finish with the second phase.”

Shaw referred to the second phase out of the five that any airline startup has to go through before becoming an official air operator. The second phase of the certification process is said to be the most crucial one as the airline company needs to get its Certificate of Operation after filing an official requirement.

The airline company is also busy coming up with an outline of its future goals by writing and delivering its manuals and commitments going forward. But currently the airline wants to finish its five-step certification process without any glitch and start its operation by the end of 2021.

The post Ultra Air locks 2021 as its inaugural flight year appeared first on International Finance.

The first route, which connects the two capitals, will run on Sundays, Mondays, Wednesdays, and Fridays. Airbus A320neos will be the flight carrier, which comes with approximately 184 seats depending on the passenger cabin configuration. The flight between Cancún and Bogotá will run on Sundays, Tuesdays, and Thursdays.

Constanza Olaya Cantor, Vice Minister of Tourism of Colombia told the media, “The the opening of these new routes by Volaris between Mexico and Colombia becomes great news and an opportunity for many more Mexicans to know all the wealth that we have in our country in terms of tourism and vice versa. Likewise, this exchange of tourists will help us to continue strengthening the path of safe economic reactivation throughout Latin America.”

Tickets will be made available from June 23rd and they will be priced from $89.99. At present, Volaris airline has the highest number of passengers transported in Mexico and runs more than 1,000 weekly flights from the capital, along with 47 active routes, and has helped transport more than 50 million passengers since its inception.

The post Volaris is all set to start flying to Colombia appeared first on International Finance.

The Latin American region, in particular is facing a string of challenges, especially with countries like Brazil,  Argentina, Colombia, Peru and Mexico reporting the highest number of coronavirus cases and sharp cumulative death rates. 

XP Investimentos analysts in their monthly report said “The expenditure ceiling will continue to be threatened if there is no willingness to alter mandatory expenditures and/or reallocate existing social benefits. Political pressure will continue, both for a new social program and for increased investments…This uncertainty may curb the performance of the Brazilian economy and financial assets in the coming quarters.”

However, the Brazilian economy is projected to grow 3.5 percent next year, while the contraction estimated for this year has improved from -6.4 percent to -5.1 percent, media reports said. In July, the economic outlook for Mexico was upgraded to 3.5 percent from 3 percent, but the median forecast for this year reduced to -9.9 percent from 9 percent. This means that economic recovery is expected to be weak.

Earlier this year, Latin America and the Caribbean should improve their stimulus to stay afloat, according to the United Nations agency. The Economic Commission for Latin America and the Caribbean has urged governments to gain financing to mitigate increased levels of poverty and unemployment.

The post Uncertainty in Latam’s economic recovery stokes concerns appeared first on International Finance.

With that, Mercado Libre will be able to launch several new products in the country. This even includes credit cards and will allow its users to invest through ewallets, media reports said. The ecommerce firm is a big player in Latin America. The company is seeking to slowly gain its position in the fintech sector.

More recently, ShipStation entered into a partnership with Mercado Libre to connect 600 million Latin American buyers to US merchants. Mariano Migues, CBT Supervisor, Mercado Libre, told the media, “We are extremely excited to kick off our partnership with ShipStation, offering U.S. merchants a gateway into one of the world’s fastest-growing ecommerce regions.”

Mercado Libre is the fourth largest marketplace in the world by visits per month and is the largest in Latin America. It has a strong presence in 18 countries including Argentina, Brazil, Mexico, Colombia, Chile, Venezuela and Peru.  With the new partnership, ShipStation’s US merchants will have access to more than 600 million Latin American users on the Mercado Libre marketplace. It is reported that the firm processes more than 1 billion sales each day.

The post Mercado Libre is preparing to foray into Chile’s fintech sector appeared first on International Finance.

The post University of Bath student aces ICAEW 100 competition appeared first on International Finance.

February 8, 2016: Grupo Aval is Colombia and Central America’s largest financial conglomerate; it operates in 12 countries, serving more than 13 million banking customers and 11 million pension and severance fund affiliates. It consolidates more than $68 billion in assets, with over $128 billion in assets under management. Grupo Aval posted a net income of $592 million in the last 12 months (LTM) ended on September 2015. Furthermore, the company has posted strong growth and profitability metrics, as evidenced by a compound annual growth rate of more than 20%[1] and a solid return on average equity currently standing at 13.5% (LTM).

Its current position within the markets it operates is the result of both the vision of Mr. Luis Carlos Sarmiento Angulo, founder, Chairman of the Board and majority shareholder of the group, and the leadership skills and tenacity of Mr. Luis Carlos Sarmiento Gutiérrez, CEO and President of Grupo Aval, who has led Aval into the international arena and who now leads the innovation strategy for the group, a key area of future success as traditional banking is being redefined and as the needs of the clients have to be met in diverse ways.

Grupo Aval consolidates four commercial banks in Colombia (Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas); one bank in Central America: Banco de America Central (BAC) Credomatic with presence in Panama, Costa Rica, Guatemala, El Salvador, Nicaragua and Honduras; the largest private pension and severance fund manager (Porvenir); and the largest merchant bank (Corficolombiana), both in Colombia.

Grupo Aval operates through a multi-brand banking model that allows maximum penetration and profitability. Banco de Bogotá is a full-service bank with nationwide coverage and focuses on commercial lending; Banco de Occidente focuses on mid-market and affluent segments and has a leading presence in the southwest region of Colombia and in niche products, such as auto loans and leasing.

Banco Popular is the market leader in payroll loans and is the leading provider of financial solutions to government entities across Colombia; and finally, Banco AV Villas is a consumer-focused bank and targets mid-income segments of the population.

As of September 2015, Grupo Aval´s banks in Colombia held a 30% market share of loans and a 34% market share of net income and served more than 10 million banking clients through its 1,397 branches and 3,775 ATMs.

Grupo Aval’s merchant bank Corficolombiana holds investments in various sectors, such as energy and gas, infrastructure, agro-industrial and hospitality, among others. The company focuses mainly on two areas: infrastructure projects and energy. In infrastructure, Corficolombiana stands out as the largest concessionaire in the country, while in energy, it consolidates the largest gas pipeline in Colombia.

Grupo Aval´s Private Pension Fund Manager, Porvenir, is the largest private pension and severance fund manager in Colombia and holds close to 50% of market share in each category. Porvenir has 7.1 million affiliates in the mandatory pension fund, 3.8 million affiliates in the severance fund and 169 thousand affiliates in the voluntary pension fund.

Grupo Aval will continue to benefit from its scale and leadership position in Colombia as growth expectations in the country are amongst the strongest in the region despite the economic difficulties resulting from the drastic drop in oil prices and its implications on government revenues.

One of the main drivers of marginal GDP growth in the coming years in Colombia is the 4^th generation concession program. This program includes the construction of more than 3,000 km of new roads and will demand at least $15 billion of capital investments. The program is expected to contribute with more than 100 pbs of GDP each year in the coming years and will increase the competitiveness of the country as it will decrease the transportation in a material form.

Grupo Aval will take part in the 4^th generation concession program in two ways. On the one hand, it expects to participate, with its natural market share and through its four banks, providing funds to the constructors who were granted the concessions. On the other hand, it will participate as an equity investor through Corficolombiana, which has already been granted three concessions, which involve the construction of 366 kilometres of roads and will require demand CAPEX of approximately $2 billion.

Aside from a positive mid-term GDP scenario, banking penetration will continue to favour financial institutions in Colombia. Measured as total loans to nominal gross domestic product (GDP), banking penetration stands below 50% suggesting that loan growth can continue to outpace that of the economy. Furthermore, the country’s middle-income class is expected to continue to expand and unemployment is expected to improve in the mid-term, both positive for the financial industry.

On top of the Colombian story, new foreign winds are boosting the size and profitability of Grupo Aval thanks to a decision taken five years ago to diversify risks and sources of revenue. Back in 2010, Mr. Luis Carlos Sarmiento Gutiérrez decided to start the internationalisation process of Grupo Aval with the acquisition of BAC Credomatic, the leading and most profitable regional banking group in Central America with operations in six countries.

Central America, as a region, presented vast opportunities because of its size, low banking penetration and high returns. Having close ties to the United States, the region’s economy is expected to grow more than Colombia both in 2015 and 2016. Furthermore, being a net importer of oil the region has benefited from the decline in oil prices that affected Colombia negatively. From a macroeconomic standpoint the diversification option taken by Aval has proven to be successful.

Aside from the culture similarities, BAC Credomatic turned out to be the perfect fit for Grupo Aval. Led with solid corporate governance standards and similar risk and reporting models, BAC started to generate synergies almost immediately after the acquisition. Between 2010 and 2014, Grupo Aval was able to double the size of the bank in Central America and double its net income. It now serves more than 3 million clients in those six countries (on top of the 10 million it serves in Colombia), through 356 full-service branches and 1,736 ATMs.

Cross synergies include best in class credit card operations imported to Colombia and solid corporate banking practices exported to Central America. With room for further improvement, returns should remain strong over the coming years.

The internationalisation process of Grupo Aval has surpassed the M&A field. In 2012, Grupo Aval entered the debt capital markets when it issued two Reg S/144A senior bonds, and in 2014 it entered the equity capital markets when it issued fully registered ADRs in the NYSE.

The last five years have been transformational for this group and new projects are already on their way. Materialisation of further synergies among its Colombian and Central American subsidiaries and investments on innovation are on top of Mr. Sarmiento´s to-do list. Aside from this, the group will remain true to its core principles and continue to look for growth opportunities in close-by markets where it can achieve a dominant position with sizable market share.

To be noted

[1] Compound annual growth rate for the last 5 years

The post Grupo Aval — Central America’s largest financial conglomerate appeared first on International Finance.

Kamilia Lahrichi

April 2, 2015: Russia’s Foreign Minister Sergey Lavrov courted Cuba, Nicaragua, Colombia and Guatemala during a four-day visit to South America in March 2015 to boost bilateral trade, as food shortage is hitting his country hard.

Last year, Moscow banned for one year agricultural products from the European Union, the United States, Canada, Norway and Australia, in an economic war. The US is isolating Russia for its policies in Ukraine, where a bloody conflict still rages, and for the annexation of Crimea in March 2014.

Embargoed products include beef, pork, poultry, fish, cheese, milk and dairy products, fruits and vegetables.

This radical policy has led to significant losses for Russia, which heavily depends on food imports to feed its 143.5 million stomachs.

In 2013, Russia imported nearly $23 billion worth of the banned products from the United States and the European Union mainly, according to Trade Map data. Europe is Moscow’s largest trading partner.

Products like French cheese, German sausage, Norwegian salmon or basmati rice have today vanished from Russian supermarkets.

Russia’s economy is going through the worst turbulence in President Vladimir Putin’s leadership due to Western sanctions as well as plummeting oil prices. Inflation runs at 10% and living standards have fallen significantly.

The Russian central bank imposed a steep interest rate hike to halt the ruble’s collapse – it lost more than 45% of its value against the dollar since the beginning of 2014.

Food scarcity in Russia, opportunities in Latin America

Lavrov met presidents Raúl Castro in Cuba, Juan Manual Santos in Colombia, Daniel Ortega in Nicaragua and Otto Pérez Molina in Guatemala, to get agricultural goods denied to the Russian market – behind the diplomatic rhetoric.

It is his second visit to the region since the war in Ukraine broke out.

During this 24-hour visit to Guatemala, the Russian envoy reaffirmed Moscow’s continued support for the Central American nation. He also lambasted the US sanctions against Venezuela and called for ending the American trade embargo on Cuba.

He also said that Russia wants to set up a regional centre to train Central American security officials to fight drug trafficking and terrorism.

In Nicaragua, Lavrov suggested that Russia might be keen to help build a waterway to rival the Panama Canal.

In Colombia, the Russian foreign minister and his counterpart agreed to increase bilateral trade, without saying by how much.

“We want to expand that market [Russian] and to work together [taking advantage of] the different opportunities. We all have a job to do, but also a commitment to improving trade relations,” said the Colombian Foreign Affairs Minister Mary Angela Holguin.

Lavrov expressed Moscow’s willingness to be a pillar in the development of a multipolar world order. He sought to build ties with regional unions like the Southern Common Market (MERCOSUR).

“The selection of countries is based on the USSR’s old links with the region,” said Sergio Berenzstein, a political analyst in Buenos Aires.

Communist Cuba and sovietico-sandinista Nicaragua are the United States’ historical foes and Russian allies. In 2002, Russia and Nicaragua inked a deal to axe the Central American country’s debt with the USSR.

Russia is reaping the benefits of the anti-imperialist and anti-American tendencies of these populist governments – aside from Colombia.

Yet, Nicaragua, Colombia and Guatemala are above all a pragmatic choice as Russian senior officials rarely visit these countries.

“There is a need to negotiate visa-free travel – it it hasn’t been introduced already – and expand bilateral trade,” explained Igor Danchenko, Program Research Manager on Russia and Eurasia at Sidar Global Advisors, a markets research company in Washington D.C.

Food supplies wanted

“Russia’s goal is to turn to new food suppliers as well as promote Russia’s technology and energy in developing countries with shortcomings in these areas,” said Matias Garcia Tuñón, Coordinator at the Russian Argentine Chamber of Commerce and Industry in Buenos Aires.

Boosting trade with Latin American countries would help Moscow get the foreign reserves it needs while the breadbasket region would reap the benefits of a larger consumer market.

For instance, Nicaragua exports meat, seafood, milk, cheese, peanuts and coffee to the Russian market. Moscow is interested in importing vegetables and tropical fruits it cannot grow due to its harsh climate.

Since 2013, both countries began negotiating a free trade agreement as exports to Russia are relatively low. In 2013, Nicaragua exported over $18 million to Russia – it is still a one-third increase compared to the previous year.

Cuba – Russia’s largest sugar cane supplier – exports citrus, concentrated juices, rum, tobacco and drugs in exchange for oil, auto parts and machinery and fertilizers. Russia is Cuba’s 10^th largest trading partner.

The trade balance between the two economies grew by 17% during the first six months of 2012, compared to the same period in 2011, when it reached $224.7 million.

Guatemala remains an under-developed market for Russia although its goods enjoy customs preferences in the federation since 2007. In 2013, the Central American country exported about $29 million worth of products to the Russian market and imported about $72 million.

Guatemala exports sugar, coffee, tobacco and cardamom to Russia and imports fertilizers, steel and zinc.

Finally, Colombia exports coffee and flowers (almost 60% of all exports) to Russia while Moscow supplies fertilizers and technology. Both countries are also in talks for a free trade agreement since 2013.

Moscow’s strategy in Latin America

Clearly, Moscow will not rely on these four markets only as they are too small to feed Russian customers.

Besides, distance is a challenge. “The logistical challenge to send to Russia perishable goods is mainly the time for maritime transport to San Petersburg (Russia’s main port apart from Vladivostok and Novorossijk),” explained Mr. Tuñón.

“If we estimate an average of 30 days for sea transit, in addition to the time to produce the food and sell it in Russia, it is very complicated to commercialise short-life products,” he added.

Air transport would be an interesting – albeit costly – option.

Although Moscow expects to capitalise on long-term relationships with Latin American countries, “Russia’s position in Cuba is destined to weaken because of sheer proximity to the United States and a large Cuban diaspora [there],” said Mr. Danchenko.

In addition, “since Latin America can’t be an alternative source of loans to replace the West and China/Asia, interests are limited,” he added.

Also Read:

Argentina: Russia’s new market

Crimean crisis: World divided on sanctions against Russia

Ukraine conflict: UK wants SWIFT punishment for Russian banks

The post Russia seeks a bite of Latin America appeared first on International Finance.