November 2, 2012 / 2:06 PM / 6 years ago

Colombia regulator takes control over brokerage firm

BOGOTA (Reuters) - Colombia’s markets regulator said on Friday it was taking administrative control of the country’s biggest stock brokerage when it failed to make a bank payment, while policymakers reassured investors their money was safe.

The regulator said it will determine in coming months whether liquidation is in order for Interbolsa, which executes a third of the daily operations on the stock market and has 50,000 clients.

Interbolsa’s shares plunged 30 percent on Thursday, when the brokerage said it had a “temporary liquidity constraint” but kept operating normally.

Colombia’s financial markets watchdog cited a failure by Interbolsa to make a payment to a local bank as reason for the takeover. The body will appoint an overseer to run operations.

“The Superintendency will define in a term not exceeding two months, renewable for a similar period, if it is possible to put the brokerage firm in a position to adequately develop its corporate purpose, or if, on the contrary, liquidation is necessary,” Financial Superintendent Gerardo Hernandez said.

Clients’ resources were not at risk, he said.

The last time the regulator took such a measure was in 2011 when it liquidated Proyectar Valores brokerage over poor resource management.

Interbolsa is part of Interbolsa SA Comisionista de Bolsa that includes insurance and investment arms and also operates in Brazil, Panama and the United States.

The move only affects the stock brokerage and not the rest of the group, the regulator said.

“At no time was this about closing (the brokerage), but was merely a situation of preventive control,” said a source at Interbolsa who was not authorized to go on record.

“It’s important to make clear that our other group companies are operating normally and are not affected by this.”

The Andean nation’s stock exchange suspended trading of the group’s shares on Friday for five working days following the regulator’s announcement, the bourse said to a statement.

The regulator’s intervention came at a time when Colombia’s capital markets are rising and companies are increasingly going public to tap local resources for investment abroad.

Experts said the most important market impact would be on investor confidence in Latin America’s fourth-largest economy.

“This may not have anything to do directly with the rest of the financial industry, but it makes investors uneasy. That will be reflected to some extent in the market,” said a portfolio manager at a major brokerage in Bogota. (Additional reporting by Carlos Vargas; Writing by Jack Kimball; Editing by Gerald E. McCormick, Steve Orlofsky and David Gregorio)

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