The Financial Superintendence of Colombia has authorized major Colombian bank Bancolombia to offer US dollar accounts in the South American country. The news will be of significant interest to foreign residents, investors, and businesses banking in Colombia, or planning to do so in the future.
The authorization will see Bancolombia’s branch of operations based in neighboring Panama — where the US dollar is the official currency — allowed to offer current accounts in the South American nation, so that individuals and businesses banking in Colombia can make deposits and transfers, as well as receive payments, in US dollars.
According to Colombian media outlet El Tiempo, the arrangement will allow for three types of deposits, based on timescales. A short-term deposit of less than a year that offers an agreed return; a medium-term deposit of one year, which offers periodic interest payments, and a long-term deposit for which the interest rate is variable, based on the Libor rate with an additional margin based on market conditions.
The arrangement will also see US dollar loans available to those banking in Colombia, including a medium- or long-term loan with a fixed or variable interest rate, as well as a short-term credit option to provide working capital to meet temporary liquidity needs.
Banking in Colombia becomes more attractive
The announcement that US dollar accounts will be available makes banking in Colombia — and generally doing business — considerably more attractive to foreign businesses and investors.
For foreigners banking in Colombia and businesses that deal in US dollars, the move will significantly cut down on costs associated with international transfers, while also shielding clients from any currency volatility that the Colombian peso may experience.
With Bancolombia now authorized to offer US dollar accounts in the country, it remains to be seen if other major Colombian banks will follow suit and seek to offer similar products.
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