* No requests for central bank support, Cardenas says
* So far no signs of contagion, according to Stock Exchange
* Investors say systemic risks unlikely, but still worry
By Helen Murphy and Nelson Bocanegra
BOGOTA, Nov 8 The collapse of Colombian
brokerage Interbolsa is unlikely to affect the overall market
and other financial entities have not wobbled or sought extra
liquidity, Finance Minister Mauricio Cardenas said on Thursday.
In a bid to calm market concern that Latin America's
fourth-biggest economy could face a liquidity squeeze after its
biggest brokerage failed to make a scheduled payment, Cardenas
said the market was operating normally.
Cash offered by the central bank - in a tandem measure to
shore up any brokerages facing problems - was not used, he said.
"The information we have is that things are normal,"
Cardenas said on local Caracol Radio. "There haven't been any
requests for support, that means there haven't been any
problems. Small brokerages are operating in stable conditions."
The government on Wednesday began the process of liquidating
the assets of troubled Interbolsa to pay investors and other
obligations after it was unable to pay 20 billion pesos ($11
million) to a local bank.
Colombian capital markets have not reacted with big swings
and investors are not overly worried about a systemic problem.
Yet some are nervous Interbolsa's troubles could have a domino
effect on other entities in payment chains and there may be
other brokerages that made risky plays similar to that of
Interbolsa's cash squeeze began when it became too dependent
on liquidity from repurchase agreements, or repos, backed by the
price of individual company shares. When confidence in the
shares dropped, sources of liquidity dried up.
One market source told Reuters that Interbolsa on Wednesday
failed to make another payment, of 3 billion pesos ($1.6
million), to a second institution.
"There are various entities that Interbolsa has failed to
pay and that's the best way to create concern in the market,"
the source told Reuters.
CENTRAL BANK TO PROVIDE LIQUIDITY
The financial market regulator intervened on Friday and
essentially took over Interbolsa, with about 50,000 clients and
one-third of daily operations on the stock market.
The brokerage has ceded control of its local bond portfolio
to Bancolombia SA.
The liquidation does not affect Interbolsa's parent company
"The problem was concentrated in Interbolsa so there should
be no worrying spillover to other brokerages," Juan Pablo
Cordoba, head of the stock exchange, said in a separate
interview with Caracol Radio.
"We are convinced there won't be, but if there are liquidity
problems, the central bank will provide liquidity."
The central bank on Wednesday offered an additional 300
billion pesos ($165 million) of liquidity to brokerages via
repurchase agreements backed by corporate debt holdings.
As of this morning none of that had been tapped, Cardenas
Colombia's IGBC index rose 1.29 percent to 14,149.96
The last time the market regulator was forced to take
control of a financial entity was in 2011, when it liquidated
the Proyectar Valores brokerage over poor management.
Proyectar was considerably smaller than Interbolsa and so
had little impact.
Colombia's capital markets have risen steadily over the past
several years as a U.S.-backed offensive against Marxist rebels
and right-wing paramilitaries made the nation safer for
business. Local companies are increasingly going public to tap
local resources for investment abroad.
Foreign direct investment this year is expected to reach a
record $17 billion, mostly in oil and mining sectors. In 2002,
when many international investors rejected Colombia because of
violence caused by decades of war, the economy attracted just $2