Special to A.M. Costa Rica

Scotiabank said Tuesday that it has agreed to buy Corporación Interfin for $293.5 million. Corporación Interfin is the parent of Banco Interfin, Costa Rica’s largest private bank.

Scotia will merge its existing facilties here with Interfin, resulting in a 13 per cent loan market share, it said. Subject to regulatory approval, the transaction is expected to close in about two month’s time and will be undertaken through a public share offering.

“Scotiabank has deep roots and a long history in Latin America and we are proud to grow our operations in this region, where we have become a leading bank,” said Rick Waugh, Scotiabank president and chief executive officer. “Acquiring Interfin complements our strategy of investing in high growth markets where we anticipate increased demand for financial services.”

“This region is an increasingly important part of Scotiabank’s international strategy, and we have built a strong franchise by delivering superior service and by providing financial stability.”

“Scotiabank’s focus on customer service and teamwork are absolutely consistent with the culture we have maintained at Corporación Interfin, which assures us that our customers and the members of the Interfin team will find themselves in a familiar environment,” said Luis Liberman, chief executive officer of Interfin.

Scotiabank has operated in Costa Rica since 1995. The bank’s subsidiary has about 300 employees, plus 39 automated banking machines and 17 branches, offering retail, commercial and cash management services.

Founded in 1979, Interfin has 24 branches, 36 automatic tellers and about 950 employees. Scotiabank’s combined Costa Rican operation will have 41 branches, 75 automatic tellers, with about $1.6 billion in assets and $1 billion in deposits, Scotia said in its announcement.
In Latin America, Scotiabank already operates in Mexico, Perú, El Salvador, the Dominican Republic, Puerto Rico, Panamá, Belize and Chile, with an affiliate in Venezuela and a representative office in Brazil.

“Scotiabank will be leveraging proven, bank-wide capabilities to expand our product and services offerings,” said Brian Brady, Scotiabank’s country head in Costa Rica.

Scotiabank, based in Toronto, has more than 55,000 employees, Scotiabank Group and its affiliates serve about 10 million customers in some 50 countries around the world. With $357 billion in assets, Scotiabank trades on the Toronto and New York stock exchanges.

The Interfin Corporation began in 1979 with the foundation of the International Finance Corp., a financial enterprise dedicated to financing and international commerce to industrial and commercial businesses.  Interfin Bank was approved in 1982.

Interfin bank has branch offices in Alajuela, Barva, Cartago, Curridabat, Desamparados, Escazu, global Park, Guapiles, Heredia, Laureles, Las Flores, Los Suenos, Novacentro, Plaza America, Rohrmoser, Sabana, San Francisco, downtown San José, San Pedro, San Carlos and Tibas.

In addition to Banco Interfin S.A, the Corporación Interfin S.A. operates Transamerica Bank and Trust Company Ltd. in the Bahamas, Interfin Valores, Puesto de Bolsa S.A., a stock brokerage and investment service; Interfin Banex Pensiones S.A., a special unit to manage pension funds with 34,000 clients.

Also, Corporación Privada de Inversiones de Centroamérica, S.A. CPI. a firm speciaizing in commercial financing; Arrendadora Interfin S.A., a firm that leases heavy equipment;  Arrendadora Interfin Guatemala S.A.; Arrendadora Interfin Nicaragua; Arrendadora Interfin Honduras S.A; Arrendadora Interfin Panamá S.A,; Arrendadora Interfin El Salvador S.A de CV, and Financiera Arrendadora Centroamericana S.A.

By the A.M. Costa Rica staff  

President Óscar Arias Sánchez told Germans over the weekend that foreign firms soon would only have to pay a tax rate here in the single digits.

He was speaking in Munich at the Costa Rica Arena, an exposition area of the country’s products set up for the World Cup crowd. Arias pointed out that a magazine had listed Costa Rica third in the world in outsourcing after India and China.

“In fact, our salary structure is more competitive than that of India and the tax rate in force for foreign corporations soon will be a single digit,” said Arias in a Spanish text released by Casa Presidencial. The corporate tax rate here is typically 30 percent.

Arias did not say how the low tax rate might be accomplished. However, he said that during his administration there will be more and more aid to foreign investment.

He said that he hoped an accord would be reached soon with Europe to eliminate import duties and that his aides are sending proposed laws to the Asamblea Legislativa to stimulate the growth of the high-tech sector. More importantly, he said, the amount of money for education is being increased.

By the A.M. Costa Rica staff

Top ministers held a strategy session Monday to figure out how to get a new tax plan passed in the Asamblea Legislativa. A communique issued after the session said that the plan might go to the legislators within a month. Little is known about the contents of the plan except that the measure is more streamlined than the 400-plus-page document promoted by the Abel Pacheco administration over the last four years. That document, the bipartisan product of a handful of ex-budget ministers, suffered a reverse when the Sala IV constitutional court ruled that legislative leaders rammed the document through the assembly in an unconstitutional way.

The new plan is expected to have at least a proposal for a value-added tax that would be equal to the 13 percent collected in sales tax now. The value-added tax would raise more money because more activities, such as professional work, would be covered. The ministers who met were Guillermo Zúñiga of the budget ministry Hacienda, Francisco de Paula Gutiérrez, president of the Banco Central, and Marco Vargas, who is minister of Coordinación Interinstitucional, a new job. Vargas said in the communique that an exact date to send the document to the legislature is not fixed but that it will be a short time, a month at the most. Vargas said that what is needed is a fiscal plan that is defensible and acceptable to all the parties represented in the assembly. For the last four years Movimiento Libertario used parliamentary procedures and thousands of separate amendments and motions to stall the fiscal plan.

In order to get the document approved, legislative leaders had to resort to a fast track procedure that the high court found insufficient. The Libertarians faced a lot of public and official pressure to withdraw their opposition. Zúñiga, in the communique, said that the plan would first be presented to the legislature and later to other interested groups in society. He said all suggestions and motions would be accepted, but it is hard to see the mechanism for that because the plan by then would be in the hands of the lawmakers. The country needs to face the structural problems of public funding, Zúñiga said. He cited tax fraud, financing the country’s massive internal and external debt and public spending. No matter what the executive branch proposes, the result, if passed, may be very different because the legislature has the power to redraft the bill.

Zúñiga also said that there are other projects of high importance in the legislature, including a redraft of the law for public concessions, loans, modernization of the Instituto Costarricense de Electricidad, opening the telecommunications market to competition, strengthening the Instituto Nacional de Seguros and opening the monopoly in the insurance market.

The government estimates that the country has a debt load of $7 billion. For every colon that flows into the Ministerio de Hacienda, the government spends two colons, financing the difference with debt.

The Central Bank itself has run up $2.8 billion in debt defending the value of the colon over the years. The central bankers want to hand this debt over to the central government, where there are more options for financing. Such a measure is in the legislature.

Officials at the Central Bank have begun talking about letting the colon float on the world market within certain limits by the end of the year. This possibility has caused concern in the expat community and would amount to a dollarization of the Costa Rican economy because hardly anyone would accept colons if they did not know what the currency would be worth tomorrow.

Recent disclosures of special benefits given public employees have irked some in the public. For example, a guard with 31-years of service on the docks at Caldera is getting a $26,000 payoff because the facility is being turned into a concession. The payoff is in addition to any pension benefits.

Similar disclosures were prompted by Sala IV rulings rejecting some benefits. The court acted on appeals filed by the Movimiento Libertario.  There also have been disclosures that President Pacheco funneled millions in cash through the Catholic Church to Limón dockworkers to buy labor peace. The church then was reimbursed by “donations” from owners of agricultural firms who had received settlements for storm damage to their crops.