Overview -- We consider Panama-based Bancolombia Panama S.A. to be a core entity to its operating holding company, Bancolombia S.A. y Companias Subordinadas. -- We are assigning our long-term 'BBB-' and short-term 'A-3' issuer credit ratings to Bancolombia Panama. The outlook is positive. -- We expect Bancolombia Panama to remain a core entity for the group, continue with its healthy financial performance, and remain an integral part of Bancolombia S.A.'s overall group strategy. Rating Action On Nov. 26, 2012, Standard & Poor's Ratings Services assigned its long-term 'BBB-' and short-term 'A-3' issuer credit ratings to Bancolombia Panama S.A. The outlook is positive. Rationale The ratings on Bancolombia Panama reflect our opinion regarding its core status (as our criteria define it) to its operating parent company, Colombia-based Bancolombia S.A. y Companias Subordinadas (Bancolombia; BBB-/Positive/A-3), which we analyze on a consolidated basis and whose group credit profile (GCP) is 'bbb-'. We regard Bancolombia Panama to be a core operation for its holding company, primarily reflecting our view that it's an integral part of Bancolombia's consolidated group strategy. The Panamanian unit primarily acts as an offshore vehicle to service Bancolombia customers' credit needs in foreign currency. Its services and product line are very closely aligned with the group's mainstream business, and it currently operates in the same target market. Moreover, it consolidates the group's operation in El Salvador, through Banco Agricola S.A. (BB-/Stable/B), which has enhanced Bancolombia's presence in Central America. Bancolombia Panama has also shown a healthy and adequate financial performance. The latter is reflected in recurrent returns on average adjusted assets hovering around 3% to 4%, while keeping sound asset quality with nonperforming loans lower than 1%. As of June 2012, Bancolombia Panama, on a consolidated basis, represented 8.4% of Bancolombia's total operating revenues and 13.1% of its total capital base. Given our current performance expectation at the Panamanian and Salvadorian units, we anticipate that it will continue to represent a significant share of the group's total revenues and equity. Bancolombia Panama shares the "Bancolombia" brand and name, which we believe closely links it to the group's reputation and risk management and controls. Outlook The positive outlook on Bancolombia Panama reflects the outlook on Bancolombia and our expectation that any ratings changes will move in tandem-- if we were to upgrade Bancolombia, we would take a similar rating action on the Panamanian subsidiary. However, and despite our opinion about its core status to the group, our ratings on Bancolombia Panama will be limited by those on the Republic of Panama (BBB/Stable/A-2). Related Criteria And Research -- Bancolombia S.A. y Companias Subordinadas Assigned 'BBB-/A-3' Ratings; The Outlook Is Positive, Nov. 26, 2012 -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011 -- Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011 -- Group Rating Methodology And Assumptions, Nov. 9, 2011 Ratings List New Rating; Outlook Assigned Bancolombia Panama S.A. Counterparty Credit Rating BBB-/Positive/A-3 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.