Community bank goes into receivership,colombia bank goes bust
A community bank in Colombia has gone bust after a consortium of banks in the country failed to meet their financial obligations.
Key points:The consortium, the largest in the world, collapsed amid the financial crisisThe bank’s debts totalled US$4bnCommunity bank had to close after it had been hit by a massive cash crunchCommunity bank head Jose Manuel Varela said it was “unlikely” the bank would survive the financial crashThe consortium of lenders and debt collectors who failed to reach an agreement with Community Bank of America has been dissolved, according to local media.
The collapse of the consortium comes amid a massive economic downturn in Colombia, which has seen the country’s economy shrink by 10.8 per cent.
Colombia has been hit particularly hard by the economic crisis, with unemployment at more than 50 per cent, according the World Bank.
The banks involved in the consortium included Standard Chartered, Standard Chartering and HSBC.
A consortium of five banks has also collapsed, after being forced to merge with another.
Community Bank of Florida is the largest of the banks in Colombia.
Its debt was estimated to be around US$2bn, while the other four had debts of around US1bn each.
It had been trying to get a loan for the bank from Standard Charters’ parent company, Standard Life Capital, but that loan was denied.
“It’s not the result of our own failure.
It’s because we had to merge to form a consortium, which was the biggest in the region,” Vareba told a local news channel.
Community Bank has been unable to make payments, forcing it to close its doors and suspend payments to its borrowers.
In a statement, the consortium said the bank had no choice but to shut its doors because of its debts.
“Community Bank is the world’s largest bank, but due to the insolvency of its debtors and creditors, it is unable to continue to meet its obligations,” the statement read.
The news comes just days after Colombia became the latest country to go into bankruptcy following the global financial crisis.
Colin Robertson, an economist at the Institute of International Finance, said that Colombia was already in the second wave of bankruptcy in Latin America, following a series of failed deals between US banks and the countrys state.
“This is not a new phenomenon.
The banks are in the third wave of bankruptcies,” Robertson said.
“They are now being held hostage by the financial markets and the US government.”