It was on June 10, 2021 at the general assembly of Finterra Bankwhen the transfer of 100% of the shares of the banking entity to Covalto LTD and Colvalto Ventures S. de .RL de CV with percentages of 0.00000009726% and 99.99999990274%, respectively, in order to finalize the purchase by the firm Credijusto of said multiple banking institution.
Days later, in the United States, fair credit, led by Allan Apoj Pascal and David Solomon Poritz, announced the acquisition with great fanfare. Subsequently, the announcement was confirmed in Mexico by the same institution that operates under the figure of multiple purpose financial company.
“The shareholders approve the transfer of 100% of the shares representing the capital of the company”, can be read in the bank’s articles of incorporation, which confirmed the sale of the entity, which had been rumored for months before the overdue portfolio problem that the banking institution had (has).
However, said purchase had to be reviewed by the National Banking and Securities Commission, at that time headed by Juan Pablo Graf Noriega, which made various observations; The regulator was not convinced by the operation despite the fact that Credijusto almost gave it as a fact.
Time passed and rumors began to emerge that said operation could fall (some already gave it as a fall). Credijusto, focused on financing SMEs through technology, tried to remedy all the regulator’s observations so that it would endorse the purchase.
Over time, the firm began to convince the regulator and it was not until a few weeks ago that the CNBV, now with Jesús de la Fuente Rodríguez at the helm, gave the go-ahead. Immediately, all the procedures began to be carried out.
In the System of Registration of Providers of Financial Services of the National Commission for the Protection and Defense of Users of Financial Services (Condusef), Changes are observed in its board of directors as of May 13.
At the same time, the National Banking and Securities Commission (CNBV)through the Ministry of Finance, published this May 13, in the Official Gazette of the Federation, the official letter by which the terms of the authorization for the organization of the bank were modified.
“The name of the company will be Banco Covalto, SA, Institución de Banca Múltiple”, can be read in the official letter published in the DOF.
According to the modified information in Condusef, the directive template is as follows:
- David Solomon Poritz, President.
- Mark Matthew McCoy Macdonald, CEO.
- Allan Apoj Pascal, member of the Board of Directors.
McCoy Macdonald remains the CEO, a position he has held since the birth of the banking institution, in March 2016.
The challenge
Covalto is a bank that, although it meets the appropriate solvency levels, with a capitalization level of 24.91%, when the minimum required of banking entities is 10.5 percent.
However, the great challenge it faces, now with Credijusto as its backup, is in its delinquency rate (IMOR). According to the authority’s records, its IMOR as of March was 20.93%, the highest indicator in the commercial banking sector.
At the time, Allan Apoj, one of the co-founders of Credijusto, commented to this medium that one of the intentions of this purchase was to be able to reach the agricultural SME segment, where Finterra (now Covalto) was positioned.
“Banco Finterra is a bank that goes to the agricultural sector. If the SME segment is neglected, agriculture is more neglected and it is a sector that is very noble, employs a lot of people and where we believe, our technology can be combined with the experience it has the bank”.
As of last March, the bank had a portfolio of 1,787 million pesos and assets for more than 2,366 million pesoswith a participation in the banking system of just 0.02 percent.
According to Credijusto calculations a few months ago, both this firm and the bank as a whole have funded more than 2,000 million dollars to SMEs in their history.
It should be noted that Credijusto has been the focus of investors’ attention. Before announcing the purchase, the firm had raised more than $400 million from banks and investment funds including Goldman Sachs, Credit Suisse, Point72 Ventures, New Residential Investment Corp., Kaszek, QED Investors, John Mack, Ignia, Promecap and LIV Capital.
Still a year ago, Credijusto announced the operation as the first where a startup acquired a bank in Latin America; later, in Mexico, another similar movement came, such as the purchase of Ualá from ABC Capital.
And so, little by little, we begin to see how the financial technology sector converges with traditional financial businesses, which a few years ago was still something unthinkable.