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Transcript of BANCO CORPBANCA S.A. - itau.co. Notes to the... · Banco Corpbanca Colombia S.A., hereinafter the...
Banco CorpBanca Colombia S.A. and its subsidiaries Notes to the Consolidated Financial Statements For the years ended on December 31, 2013 and 2012 (Amounts stated in millions of Colombian pesos, except for par value of shares, income per share, and exchange rates or when stated otherwise)
1. REPORTING ENTITY Through Public Deed No. 1846 dated August 6, 2013, the full compilation of the Corporate Bylaws was authorized, in which was approved a comprehensive reform of the Bylaws of Banco Corpbanca, S.A., in order to adjust the Governance structure, due to the acquisition of Banco Helm Bank S.A. and its subsidiaries after having obtained the authorizations of the corresponding Colombian and foreign entities. Banco Corpbanca Colombia S.A., hereinafter the Parent Company, is a private joint-stock corporation incorporated through Public Deed No. 721 dated October 5, 1912. The corporate domicile of the Parent Company is located in the city of Bogotá, D.C., Republic of Colombia. Its term will be through December 31, 2100. By operation resolution S.B. 3140 of September 1993. On April 16, 2008 and through Public Deed No. 1313 a reform to the Corporate Bylaws related to the capital stock increase was authorized. On May 29, 2012 CorpBanca, S.A. (“Corpbanca Chile”) acquired the control of Banco Corpbanca Colombia (formerly Banco Santander Colombia S.A.) through the purchase of 51% of the shares to Banco Santander S.A. España; subsequently, on June 22, 2012, CorpBanca acquired an additional interest of 40.93% reaching a percentage of 91.93% of the capital stock. On August 29, 2013 as a result of the subscription and payment of new shares of the parent company by Inversiones Timon S.A.S., Inversiones Carron S.A.S., Comercial Camacho S.A.S. companies related to Helm Corporation, and Kresge Stock Holding Company Inc., and who accepted a private share offer made by the parent company in development of the authorization of the General Shareholders Assembly of placing the shares without being subject to the preemptive right, and prior to compliance with all the requirements of law, the stock composition of the parent company is as follows:
Shareholder Shares %
Corpbanca Chile 500,275,451 66.387704%
Inversiones CorpGroup Interhold Limitada
93,306,564 12.381996%
Santander Investment Colombia 120 0.000016%
MInoritarios CorpBanca 2,823,151 0.374639%
Inversiones Timon 50,958,825 6.762353%
Inversiones Carron 43,147,272 5.725742%
Comercial Camacho Gomez SAS 52,615,595 6.982211%
Kresge Stock Holding Company Inc 10,439,451 1.385339%
Totals 753,566,429 100.0%
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Corpbanca Chile is a banking joint-stock corporation incorporated pursuant to the laws of the Republic of Chile. Chilean banks are subject to the supervision of the Office of the Superintendent of Banking and Financial Institutions ("SBIF") of Chile, under the provisions of the General Banking Act (the "Act") of 1997. The corporate purpose of the Parent Company is the gathering of funds in checking accounts, as well as the gathering of other deposits short and long term deposits, with the main purpose of conducting active credit transactions. Further, the Parent Company may execute all actions and conduct all investments that are legally authorized for banking establishments. The Parent Company shall have a President appointed by the Board of Directors, who will be the principal legal representative for all legal purposes. The Parent Company shall have as many Vice Presidents as the Board of Directors should designate. At the moment of making those appointments, the Board may determine whether or not they exercise the legal representation of the Company. In those cases where the Board of Directors should designate one or more Vice Presidents with legal representation functions, they shall have the functions and powers listed in letters a, c and d of article 46 of the corporate bylaws. Additionally, and without detriment to the foregoing, the Board of Directors may select one of the Vice Presidents to hold the capacity as the First Alternate of the President, who shall exercise the legal representation under the terms foreseen in these bylaws. During 2013, five meetings of the Shareholders Assembly were held, in which the following matters were addressed among others: - Ordinary Shareholders Assembly held on March 26, 2013, in addition to addressing the
matters demanded by law for said meeting, it was placed for consideration of the shareholders and was approved by the same: The project of managing profits of 2012, based on which the sum corresponding to the same 136,414, was used to increase the legal reserve of the Bank. By provision of the General Shareholders Assembly it was provided that the profits of the current period 2013 are used to increase the legal reserve of the Bank. The above in order to increase with the same the Additional Equity and the solvency index of the Bank pursuant to decree 1771/2012. In addition, the convergence plan towards the IFRS and the current situation of the Bank and its subsidiaries pursuant to the terms stated in decree 2784/2012, (Minute No. 175) was informed.
- Pursuant to the stated in the General Shareholders Assembly, held on July 18, 2013, the
request submitted by the Financial Superintendency was ratified, on the management of the profits of the current period 2013. Likewise, the commitment of keeping for a period of 5 years from the date of the Assembly, the occasional reserves other than the tax reserve referred to in decree 2336/1995, which at the time reached the sum of $2,533 (Minute No. 176) was approved.
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- In the Special Shareholders Assembly held on August 6, 2013, a comprehensive reform of the
Corporate Bylaws of Banco Corpbanca S.A. was approved, in order to adjust the Governance structure, of the same due to the acquisition of Banco Helm Bank S.A. and its subsidiaries after having obtained the authorizations from the Colombian and relevant foreign authorities.
- In a Special Shareholders Assembly, held on November 8, 2013, the entrance into the
Advisory agreement with CorpBanca and a Trademark License Agreement with Corpgroup (Minute No. 178) was approved.
- In Special Shareholders Assembly, held on November 29, 2013, the submission of a Public
Offer of Acquisition of the shares with preferential dividend and without right to vote issued by Helm Bank S.A. (Minute No. 179) was approved.
As of December 31, 2013 and 2012 the parent company and its subordinates had 1,578 and 1,566 employees respectively. The parent company closed the year in December 2013 with 84 offices, while in 2012 closed with 80 offices, cash on hand extension, four Preferential Banking offices and 3 SMEs centers divided by services, sales and self-service. As of December 31, 2013 and 2012, neither the parent company nor its subordinates had open any non-banking correspondents regulated in decree 2233 of July 2006. The parent company has the following subordinates, with which it comprises its business group: By provision of the Financial Superintendency in Colombia, Banco Corpbanca eliminated the goodwill generated by the purchase of Corpbanca Investment Trust, reason why the cost of investment changed and the amortization of the goodwill was eliminated. As of December 31, 2013:
Company
Corpbanca Investment Valores S.A.
Comisionista de Bolsa
Corpbanca Investment
Trust Colombia S.A. Sociedad Fiduciaria
Consolidated interest 2013 94.94% 94,50%
Cost 5,300 80.257
Appraisal (impairment) 9,254 (25.945)
Domicile Colombia, Bogota Colombia, Bogota
Corporate purpose Stock Broker Trust company
Foundation date September 4, 1997 July 11, 1979
As of December 31, 2012:
Company Corpbanca Investment
Valores S.A.
Corpbanca Investment
Trust Colombia S.A.
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Comisionista de Bolsa
Sociedad Fiduciaria
Parent company’s interest in 2012
94.94% 94,50%
Cost 5,300 41,626
Appraisal 9,425 5,552
Goodwill acquired - 38,631
Goodwill amortization - 481
Balance pending amortization - 38,150
Term pending amortization - 19.5 years
Domicile Colombia, Bogota Colombia, Bogota
Corporate purpose Stock Broker Trust company
Foundation date September 4, 1997 July 11, 1979
In August 2013 Banco Corpbanca acquired for merger purposes 87.42% of the shares in Helm Bank S.A. and through it an indirect interest in Helm Fiduciaria S.A., Comisionista de Bolsa S.A., Helm Panama S.A., Helm Casa de Valores Panama and Helm Bank Cayman. This investment is not subject to consolidation as it is considered a temporary investment, which will be subject to merger in 2014.
Company Helm Bank S.A.
Consolidated interest 2013 87.42% Cost 1,272,459 Appraisal 39,739 Goodwill acquired 905,920 Goodwill amortization 59,479 Balance pending amortization 846,441 Term pending amortization 56 months Domicile Colombia, Bogota Corporate purpose Financial Entity Foundation date July 3, 1963
Corpbanca Investment Valores S.A. Comisionista de Bolsa (Cival or the Stockbroker), exercises investment banking and brokerage house activities, with corporate domicile in Bogota. Through shares purchase agreement dated June 29, 2012 the parent company recorded the purchase of 94.5009% equivalent to 7,097,507 shares of Santander Investment Trust Colombia S.A. today Corpbanca Investment Trust Colombia S.A. Sociedad Fiduciaria (Citrust or the Trust Company), becoming its subsidiary, which corporate purpose is the performance of all actions, agreements and operations permitted to trust companies, regulated by Colombian legislation both in the Civil Code and in the Code of Commerce, Law 45/1923 and Law 45/1990. Its activity is mainly developed through the investment, management, guaranty and property trusts and collective portfolio management. As of December 31, 2013 the value of the assets, liabilities, equity and profit or loss for the period of the parent company and subordinates is as follows: Effect of consolidation on the structure of the financial statements (parent company) year 2013
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Name Assets Liabilities Equity Profit (Loss)
for the period
Banco Corpbanca (Parent Company)
12,499,155 9,587,614 2,911,541 107,782
CorpBanca Investment Valores S.A. 17,805 2,475 15,330 484
CorpBanca Investment Trust Colombia S.A.
62,041 4,569 57,472 7,846
Elimination of reciprocal transactions -30,112 -30,112
Elimination of investment in subsidiaries
-68,867 -68,867 -456
Excess of the investment cost 27,042 27,042 -7,726
Reclassification minority interest 3,936 -3,936
Total effect of consolidation 12,507,065 9,568,482 2,938,583 107,930
As of December 31, 2012 the value of the assets, liabilities, equity and profit or loss for the period of the parent company and subordinates is as follows: Effect of consolidation on the structure of the financial statements (parent company) year 2012
Name Assets Liabilities Equity Profit (Loss) for the period
Banco Corpbanca (Parent Company) 9,176,072 8,231,350 944,722 136,414
CorpBanca Investment Valores S.A. 17,742 2,232 15,510 -3,306
CorpBanca Investment Trust Colombia S.A.
59,032 9,109 49,923 9,818
Elimination of reciprocal transactions -26,547 -26,547
Elimination of investment in subsidiaries
-61,903 -61,903 -6,512
Reclassification minority interest 3,530 -3,530
Total effect of consolidation 9,164,396 8,219,674 944,722 136,414
The financial statements are consolidated in their assets, liabilities, equity, incomes and expenses accounts and memorandum accounts. Eliminations of reciprocal transactions as of December 31, 2013 and 2012 are detailed as follows: Eliminations from Asset 2013 2013
CorpBanca Investment
Valores
CorpBanca Investment
Trust Total
CorpBanca
Investment
Valores
CorpBanca Investment
Trust Total
Checking account deposits 11,805 18,300 30,105 11,805 15,512 26,536 Subordinates investment cost 5,300 80,257 85,557 5,300 41,626 46,926 Sundry accounts receivable - 8 8 - 11 11 Investment valorization/impairment
9,255 (25,945) (16,690)
9,425 5,551 14,976
Total 26,360 72,620 98,980 25,749 62,700 88,449
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Eliminations from Liabilities
Private checking accounts 11,805 18,300 30,105 11,024 15,512 26,536 Accounts payable - 8 8 - 11 11 Minority interest (776) (3,160) (3,936) (785) (2,745) (3,530)
Total 11,029 15,148 26,177 10,239 12,778 23,017
Eliminations and reclassifications from the subordinate’s Equity
Capital stock 1,424 8,065 9,489 1,424 8,063 9,487 Reserves 1,271 29,603 30,874 1,271 25,565 26,836 Premium in placement of shares
1,424
1,424 1,424 4,038 5,462
Valorization of available-for-sale investments
11,103 (25,799) (14,696) 2,479 233 2,712
Equity revaluation 1,375 - 1,357 1,357 - 1,357 Results from prior periods (2,024) 7,675 5,651 9,909 - 9,909 Results from the period - 7,726 7,726 (3,139) 9,278 6,139 Reclassification minority interest
776 3,160
3,936 785 2,745 3,530
Total 15,331 30,430 45,761 15,510 49,922 65,432
Eliminations from Revenue 2013
CorpBanca Investment
Valores
CorpBanca Investment
Trust Total
Interest revenues 451 575 1,026 Commissions revenues 1 69 70 Leases revenues 64 89 153 Market advising revenues 613 - 613 Service agreement revenues 780 1,005 1,785
Total 1,909 1,738 3,647
Eliminations from Revenue 2013
CorpBanca Investment
Valores
CorpBanca Investment
Trust Total
Leases expenses 64 89 153 Bank commission expenses 613 - 613 Network use commissions - 53 53 Service agreement expenses - 1,005 1,005 Other services expenses 1,232 591 1,823
Total 1,909 1,738 3,647
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Eliminations from Revenue 2012
CorpBanca Investment
Valores
CorpBanca Investment
Trust Total
Interest revenues - 67 67 Commissions revenues 1 157 158 Leases revenues 64 89 153 Market advising revenues 80 - 80 Service agreement revenues 780 1,005 1,785 - - -
Total 925 1,318 2,243
Eliminations from Revenue 2012
CorpBanca Investment
Valores
CorpBanca Investment
Trust Total
Leases expenses 64 89 153 Bank commission expenses 1 1 2 Network use commissions - 56 56 Service agreement expenses - 1,005 1,005 Other services expenses 860 167 1,027
Total 925 1,318 2,243
2. MAIN POLICIES AND ACCOUNTING PRACTICES Presentation bases The purpose of consolidation is to submit the financial condition and results of transactions of Banco Corpbanca Colombia S.A. (the parent company) with its subordinates, as if they were one single company, which means the elimination of balances and reciprocal transactions between the parent company and its subordinates, subject to consolidation. The accounting standards applied and the classification and consolidation of the financial statements attached are submitted pursuant to the stated by the Financial Superintendency in Colombia, not provided in them, with the standards of accounting generally accepted in Colombia, pursuant to Decree 2649/1993. The Code of Commerce demands the preparation of financial statements with a general purpose consolidated in the tax years submitted to the Shareholders Assembly, without these constituting a reference for the distribution of dividends and appropriation of profits. Consolidation principles The consolidated financial statements of the parent company have been prepared based on the requirements provided by Chapter X of the Basic Accounting and Financial Circular of 1995 of the Financial Superintendency in Colombia, with homologation to the accounting principles and elimination of accounts and important transactions between related companies. The consolidated financial statements include the parent company and its subordinates’ accounts, under the following guidelines for purposes of consolidation:
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The parent company has over fifty percent (50%) of the corporate rights or contributions outstanding with right to vote of its subordinates, directly.
The parent company and its subordinates have the right to issue the constituent votes of the minimum decisive majority in the maximum corporate body and have the number of votes required to appoint most of the members of the Boards of Directors.
The parent company, directly, by reason of an act or business with its subordinates or with its partners, has a dominant influence on the decisions of the management bodies of the same.
During 2013 the adjustment of consolidation consisted on:
The elimination of the investment in the subordinates CorpBanca Investment Trust and CorpBanca Investment Valores and the elimination of the equity on the date of purchase of the subordinates.
Acknowledgment of the excess in the value of purchase of Corpbanca Investment Trust and amortization of this value.
The reclassification of the minority interest.
The elimination of the reciprocal transactions intergroup.
During 2012 the adjustment of consolidation consisted on:
The elimination of all equity accounts and of profit of the subsidiaries against the accounts of investment cost and the valorization of the parent company.
The reclassification of the minority interest
The elimination of the reciprocal transactions intergroup. Accounting policies In addition to the accounting policies implemented by the parent company and stated in the individual report, on the consolidation the following are applicable: a. Accounting Period – Both the parent company and its subordinates have defined in the bylaws
to effect a cut of its accounts, prepare and publish financial statements of general purpose once a year, as of December 31.
b. Appraisal of investments in the Stockbroker – The Office of the Superintendent by External Circular Letter 030 of July 24, 2009, eliminated the marketability index as a reference for valuation for the shares classified as of medium and high marketability.
c. Debtors – In addition to the stated for the parent company in its individual report, this item includes the accounts receivable from clients for the trust management, of securities and foreign investment funds, and the management of securities funds, among others.
d. Provision accounts receivable in the Trust Company - The Trust Company evaluates the
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accounts receivable (commissions) considering the stated in the External Circular Letter 100/1995. The Trust Company classifies the commissions due by the management of the trusts as commercial portfolio.
Pursuant to the stated in Chapter II of the External Circular Letter 100/1995 of the Financial Superintendency in Colombia, the Trust Company to classify the commercial portfolio, does not consider as unique factor of assessment the attention or service of the debt, which implies that in some cases a credit is classified in a risk category higher than the determined by the attention to debt (temporality).
As a result of the portfolio assessment, the same is classified in five categories, namely:
Rating
Provision
percentage
%
Normal risk - Category A -
Acceptable risk - Category B 1
Considerable risk - Category C 20
Important risk - Category D 50
Risk of uncollectability – Category E 100
When a commercial credit is rated “C” or in the category of highest risk, there are no yields or other concepts; therefore, the revenue is not recognized until effectively collected. While its collection is made, the relevant registry is made in contingent accounts. In the same opportunity in which the accrual of the yield and other concepts is suspended, the totality of the corresponding accounts receivable is provisioned.
e. Payment of trust commissions – The revenues for trust commissions is paid by the accrual system pursuant to the stated in each trust agreement.
f. Trust accounts – the trust goods are accounted for separately from the assets of the Trust Company and from those corresponding to other trust businesses, and are registered in trust accounts within the balance of the Trust Company.
g. Hedge accounting – Is comprised by such financial instruments derived with purposes of hedging and the primary positions subject to hedging that comply with the requirements demanded in numeral 6 of Circular 100, which accounting may be effected implementing the special criteria stated.
Typologies:
The typologies are framed in chapter XVIII of the Basic Accounting and Financial Circular 100/1995 of the Financial Superintendency in Colombia. The Parent Company shall initially operate in the cash flow hedge.
The distinction of this type of derivatives shall be defined in the system for accounting purposes, in order to be able to make the report before the control entity, having separate accounting registries, being able to measure the effectiveness ratio between 80% and 100% in order to demonstrate they are of hedging and not of speculation.
Take into account that when this ratio is out of range in two consecutive months, it is no
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longer considered hedging and becomes a speculation derivative.
Have very clear the measurability of the hedge. Requirements:
The allocation of accounting hedging shall be evidenced in writing on the date when the accounting hedge is executed, cannot be used as hedge retroactively to its negotiation.
The measurement of the hedge shall be made at least once a month, in any case always at closure of the monthly period.
The hedge shall be highly effective
The hedge shall be related to the risk identified, not with global risks of the company
Comply with the documentation for the special accounting management of hedges with derivative instruments
Cash flows hedge The cash flows hedges shall be counted as follows:
a) Derivative financial instruments with hedging purposes: The profit or loss accrued of the derivative financial instrument with hedging purposes for cash flows shall be directly paid to the equity account “Profit or loss accrued not made in derivative financial instruments for hedging purposes – Cash flows hedges”, with the corresponding sign.
On the date in which any flow of the derivative financial instrument is liquidated with the counterparty, the entity controlled shall register the value of the net flow liquidated, whether positive or negative, in the corresponding subaccount of incomes or expenses.
On the date in which the hedge terminates due to the occurrence of any of the provisions in chapter 18, the accrued result of the derivative financial instrument used for this type of hedge, found in the equity subaccount “Profits or losses accrued not made in derivative financial instruments with hedging purposes – cash flow hedges” shall be transferred to the income statement in the corresponding subaccount for derivative financial instruments.
b) Primary positions: The flow projections of the primary positions subject to hedge which are agreed at a variable rate shall use the implicit future rates obtained from the zero coupon rates of the relevant Libor-Swap curve, for the corresponding terms, when the flows are allocated in the currencies for which there are curves. In the other cases, that is to say for the flow projections of primary positions agreed at a variable rate, where there is no curve, they must be developed following a similar procedure to that used for the flow projections of variable rate of the swaps.
The flows of the primary positions are attributable to the margin agreed on the variable rate (if applicable), which risk the entity does not want to cover, they shall not be included for the calculation of the present value of the primary position, but for the quantification and registry of the same the applicable methodology of accounting shall be followed, similar to the occurred with any position of the Bank Book that is not to be hedged.
In order to calculate the present value of the cash flows of the primary position, the entities controlled shall use as discount rates the same interest rates of zero coupon used for the valuation of the financial instrument derived used for the hedge.
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The counting of the primary positions shall be made with the following procedure:
(i) The primary position is still being recorded by its relevant nominal value on each date, in the same balance sheet and income statement accounts, using the same methodology and dynamics as it would happen if it had no coverage.
(ii) From the date on which the coverage arises with derivative financial instruments, simultaneously with the registration of numeral i) above, the present value of the primary position must be registered in the relevant miscellaneous subaccount created for such purpose, calculated under the methodology set out in this chapter, procedure which will be kept until there is a special accounting treatment for the derivative financial instrument with purposes of coverage.
In the same manner described above, they should proceed with each of the primary positions
covered that had been executed by the supervised entity.
h. Changes in Accounting Policies
Following instructions from the Financial Superintendency in Colombia, on June 25, 2013, the Parent company reclassified the goodwill amounting to $38,631 as a higher value of the investment, which is originated in the purchase of Santander Investment Trust Colombia S.A. Sociedad Fiduciaria (currently Corpbanca Investment Trust S.A. Sociedad Fiduciaria) and which was previously being amortized to 20 years, which generated that in the Consolidated Financial Statements as of December 31, 2013, this asset is classified as deferred charge, amortized to 5 years, and an accrued amortization of $11,589 is recognized. The accounting of this amortization was made in regard to the expenses account for an amortization of $7,726 and a lower value of profits of previous years for an amount of $3,863. The External Circular Letter 050 of 2012 of the Financial Superintendency in Colombia, concerning the suppliers of assessment prices whose modification was provided in sub-numeral 2.1 and the first subparagraph of numeral 2.2. of the External Circular Letter 006 of 2012, in the sense that: i) the deferral of the profits and/or losses must be individually made by each of the investments and they may not be set-off and a net may not be established among them. Such profits and/or losses must provide for the clearing of the provisions constituted and of the deferred to amortize the derivative financial instruments ‘swaps’, and ii) that the decision whether to defer or not the profits and/or the losses generated on February eighteen (18), 2013, should be approved by the Board of Directors, which should indicate the value to defer and the term during which the deferral would be made. Such decision was unchangeable and should be implemented, no later than March 1, 2013. According to the above, the Bank proceeded from March 1, 2013 to amortize in the income statement all the effects of the assessment of Swaps that were previously subject to amortization and as of such date amounted to $24,944, such decision was approved by the Board of Directors at its meeting dated April 23, 2013 according to Minute No. 3592.
3. CASH AND CASH EQUIVALENTS
As shown by the figures detailed below, the cash and deposits in the Central Bank (“Banco de la
República”) in legal tender amounted to $461,433 and $411,672, as of December 31, 2013 and
18
2012 respectively. They corresponded to the amounts computable for the bank cash position that
the Parent Company compulsorily keeps on the deposits received from clients, in stringent
compliance with the legal norms currently in force and effect.
As of December 31, 2013 and 2012, the balance consisted of the following:
Legal Tender
2013 2012
Cash 127,816 104,613
Central Bank 333,617 307,059
Banks and other financial entities 15,346 12,195
Remittances in transit 77 83
Provisions (1) (25) (67)
Total 476,831 423,883
Foreign currency restated into legal tender
2013 2012
Cash 13,329 14,496
Central Bank 21 19
Banks and other financial entities 17,047 19,247
Remittances in transit 12 22
Total 30,409 33,784
Total cash and cash equivalents 507,240 457,667
As of December 31, 2013 and 2012, the cash shows no other restriction. As of such cut-off dates,
the balance sheet of the parent and its subordinates showed reconciling items aging in excess of
30 days amounting to $10 and $28, respectively, that generated provisions for $25 in 2013 and
$67 for 2012.
As of December 31, the Parent Company has no items exceeding 30 days that generate
provisions.
(1) It corresponds to the provisions on the cash on hand of Corpbanca Investment Trust Colombia
S.A., generated by the items pending to regulate which are detailed below:
As of December 31, 2013 and 2012, the detail of the items pending to regulate aging in excess of 30 days for CorpBanca Investment Trust, was as follows:
2013 2012 Concept Value No. Items Value No. Items
Debit notes not recorded in books - 5 1 1 Deposits not recorded in books - - 21 9 Credit notes not recorded in books 10 6 4 1 Credit notes not paid by the Bank - - 2 1
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Total 10 11 28 12
4. INVESTMENTS, NET
As of December 31, 2013 and 2012, all investments are valued and recorded in accordance with Chapter I of the Basic Accounting and Financial Circular Letter No. 100 of 1995 issued by the Financial Superintendency in Colombia. Additionally, the Parent Company evaluated the solvency risk of the investment issuers, except for those issued by the Nation, by the Central Bank or those guaranteed by the Nation.
The mandatory investments acquired in the primary market before the enactment of External Circular Letter 033 of 2002 issued by the Office of the Superintendent of Banking (currently, the Financial Superintendency in Colombia), with the purpose of complying with requirements of Chapter I of the Basic Accounting and Financial Circular Letter No. 100 of 1995, are classified as marketable investments; however, according to the transition regime, they are valued in accordance with numeral 6.1.2 of the aforementioned circular letter. These investments expired in August 2012. The mandatory investments acquired subsequent to the enactment of External Circular Letter No. 033 of 2002, have been classified as held-to-maturity investments and their valuation is made in accordance with numeral 6.1.2 of the aforementioned circular letter.
In March 2013, the external circular letter No. 050 dated November, 2012 of the Financial Superintendency in Colombia entered into force, which gives way to the financial sector to choose any of the suppliers of market prices authorized by this Superintendence, in order to conduct the assessment of financial instruments and provide for the clearing of the provisions constituted and the deferral of the profits and/or losses generated in such change.
The above resulted in the clearance in the first half of 2013 of 100% of the provision accounted for protection by impairment of the concession bonus of the Dual Highway Bogotá – Girardot for $2,336, previously accounted due to impairment of the investment grade.
As of December 31, the marketable investments are as follows:
Marketable Debt securities
2013 2012
Security Type: ENTITY RATE BALANCE
RATE BALANCE
Internal Public Debt Securities issued or guaranteed by the Nation:
Treasury Securities (TES legal tender) Direction of
Treasury 4.4% 635,817 5.3% 313,292
Treasury Securities (TES UVR) Direction of
Treasury 2.4% 313,895 - -
Tax Refund Securities - TIDIS Direction of
Treasury - - 1.0% 41
Other public debt securities:
Bonds – legal tender District,
Bancoldex, Isagen and others
5.4% 59,006 6.4% 59,644
20
Fixed-term deposit certificates Findeter,
Bancoldex 5.8% 10,025 - -
Securities issued, endorsed, accepted or guaranteed by institutions overseen by the Financial Superintendency:
Ordinary bonds Financial entities
and others 20.2% 1,608 7.4% 2,454
Fixed-term deposit certificates 5.5% 27,247 Securities issued, endorsed, accepted or guaranteed by multilateral credit agencies:
Securities issued endorsed by multilateral credit agencies
World Bank, Corp. Int. Inv. and
others 5.8% 8,889 7.0% 9,013
Total 1,056,487 384,444
Marketable equity securities
2013 2012
SECURITY CLASS
ENTITY
Interest %
BALANCE
Interest %
BALANCE
Open Collective Portfolio without Permanence Agreement (1) CITRUST 11.3% 648 7.6% 562
Open Fund with Permanence Agreement for Platinum Compartments 75-25 (1)
CITRUST
6.9% 207 2.2% 59
Open Fund with Permanence Agreement for Platinum Compartments 90-10 (1)
CITRUST
20.2% 482 21.3% 474
Interest in Pension Funds and Severance (2)
FONPET 1.1% 35,078 1.1% 31,858
Total 36,414 32,953
Total Marketable Investments 1,092,901 417,397
The maturity of the public debt securities “TES” that represent a high percentage of the total
portfolio as of December is as follows:
2013 2012
Class Maturity date Value % Value %
T .E.S. (Fixed Rate) 2013 - 0.0% 1,100 0.1%
T .E.S. (Fixed Rate) 2014 573,541 60.4% 55,004 5.8%
T .E.S. (Fixed Rate) 2015 16,081 1.7% 1,097 0.1%
T .E.S. (Fixed Rate) 2016 21,821 2.3% 55,578 5.9%
T .E.S. (Fixed Rate) 2018 24,366 2.6% - 0.0%
T .E.S. (Fixed Rate) 2022 - 0.0% 46,137 4.9%
T .E.S. (Fixed Rate) 2024 - 0.0% 154,376 16.3%
T .E.S. (Fixed Rate) 2028 8 0.0% - 0.0%
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T .E.S. (RVU Rate) 2015 311,540 32.8% - 0.0%
T .E.S. (RVU Rate) 2017 2,234 0.2% - 0.0%
T .E.S. (RVU Rate) 2021 121 0.0% - 0.0%
TOTAL 949,712 313,292
(1) As of December 31, 2013 and 2012, the Trust Company kept interests in the collective portfolios managed by it, Open Collective Portfolio without permanence agreement 3.35% plus the interest of Banco CorpBanca 7.95%, Open Fund with permanence agreement for Platinum Compartments 75-25 6.86% and Open Fund with permanence agreement for Platinum Compartments 90-10 20.2%.
(2) As of December 31, 2013, the Trust Company kept an interest equivalent to 1.07% on the resources managed in order to comply with the equalization reserve required in the Consortium CCP 2012, addressing the procedure set out in Decree 1895/2012.
A break-down of held-to-maturity investments as of December 31, 2013 and 2012 is as follows:
Held-to-maturity Investments
2013 2012
Class of Security: ENTITY RATE BALANCE
RATE BALANCE
Internal public debt securities issued or guaranteed by the Nation:
Treasury securities (TES legal tender) Direction of
Treasury 8.4% 128,265 8.4% 128,989
Títulos de desarrollo agropecuario clase B Finagro 0.2% 84,551
1.3% 72,603 Títulos de desarrollo agropecuario clase A Finagro 2.1% 91,321
- -
Fixed-term deposit certificates (CDs) Findeter,
Bancoldex - -
3.1% 19,229
Debt reduction securities The Nation - 38,515
- 53,096
TIPS Titularizadora
Colombia - 46,867
7.3% 70,180
Total 389,519
344,097
By the end of 2010, securitization of the mortgage portfolio was conducted; with that, the Bank
participated in the issuance of securities of such securitization amounting to $115,857,
denominated in Class A securities amounting to $97,380 with variable monthly capital
amortizations and final maturity in 2020; Class B securities amounting to $13,272; Class MZ
amounting to $3,214; and Class C amounting to $1,991, whose expiration goes up to their maturity
in 2025.
At the 2013 cut-off date, these securities balance amounts to: class A $27,625; class B $13,378;
class C $2,628 and class MZ $3,236.
At the 2013 cut-off date, a 10% provision was recorded corresponding to market risk for Class C
securities amounting to $264, according to the rating issued by Standard & Poor’s.
22
The maturity of all the securities guaranteed by the nation in this item is as follows:
Maturity Date 2013 % 2012 %
TES (Fixed Rate) 2024 128,266 100 128,989 100
Total
128,266 100 128,989 100
A break-down of available-for-sale investments as of December 31 was as follows:
Available-for-sale investments in debt securities
2013 2012
Class of Security ENTITY RATE BALANCE CAT.
RATE BALANCE
CAT.
Internal public debt securities issued or guaranteed by the Nation:
Treasury securities (TES legal tender) Direction of the
Treasury 6.1% 508,754 5.2% 805,420
Total 805,420 805,420
The maturity of securities guaranteed by the Nation in this item is as follows:
2013 2012
CLASS MATURITY
DATE VALUE % VALUE %
T .E.S. (Fixed Rate) 2015 0.0% 43,857 5.4%
T .E.S. (Fixed Rate) 2016 204,032 40.1% 127,829 15.9%
T .E.S. (Fixed Rate) 2018 0.0% 283,455 35.2%
T .E.S. (Fixed Rate) 2020 50,615 9.9% 55,862 6.9%
T .E.S. (Fixed Rate) 2022 254,107 49.9% 294,417 36.6%
TOTAL 805,754 805,420
23
Available-for-sale investments in equity securities
2013 2012
Name of Issuer Equity Number of
Shares Held
Part (%)
Adjusted
Cost Valuation
Result Equity
Number of Shares Held
Part (%)
Adjusted
Cost Valuation
Result
Deceval S.A. 66,067 27,932 5.8% 1,891 1,938 67,678 27,932 5.8 1,891 2,031
A.C.H. Colombia S.A. 23,393 241,354 3.7% 199 658 19,899 241,354 3.7 199 530
Redeban Multicolor S.A. 72,263 159,666 1.6% 345 809 67,625 159,666 1.6 345 735
Cámara Compensación de Divisas 4,270 79,687,500 3.2% 80 56 4,022 79,687,500 3.2 79 48
Cámara Riesgo Central Contraparte 30,340 507,552,268 1.3% 540 (159) 30,030 471,659,313 1.2 472 (121)
Colombia Stock Exchange 26,186 32,340 5.4% 322 989 - - 1.6 92 2,611
Helm Bank S.A. 1,501,002 4,043,966,379 87.4% 1,272,460 39,739 - - - - -
BVC - - - 92 - - - - - -
Fogacol - - - 331 - - - 322 -
Total 1,276,260 44,030 3,400 5,834
During year 2013, the Bank purchased 32,340 shares of Cifin S.A., corresponding to 5.39% of interest and 4,043,966,379 shares of Helm Bank corresponding to 87.42%. The information regarding the purchase of the investment is extended in the paragraph of intangible assets of note 12 “Other Assets”. During year 2012, the Bank purchased 7,097,507 shares of Corpbanca Investment Trust, corresponding to 94.5% of interest for an amount of $80,257. For consolidation purposes, the excess of the purchase value was accounted amounting to $38,631 with an amortization as of December 31 of $11,589 and a book value of $27,042. The dividends received from these investments in the years ended December 31, 2013 and 2012, were as follows: Entity 2013 2012
Deceval S.A. 1,592 1,486
A.C.H. Colombia S.A. 40 73
Redeban Multicolor S.A. 457 -
Colombia Stock Exchange - 138
Cámara Compensación de Divisas 29 12
CorpBanca Investment Trust 272 -
BVC 129 -
Total 2,519 1,709
RIGHTS OF REPURCHASE OF INVESTMENTS
The Parent Company closed with operations of rights of repurchase of securities as of December
31, 2013, as follows.
24
Marketable Investments
CLASS Maturity date 2013 % 2012 %
T .E.S. (Fixed Rate) 2014 257,128 100 - -
Total 257,128 100 - -
Held-to-Maturity Investments
Maturity date 2013 % 2012 %
T .E.S. (Fixed Rate) 2024 46,574 100 - -
Total 46,574 100 - -
Available-for-sale investments
Maturity date 2013 % 2012 %
T .E.S. (Fixed Rate) 2016 200,256 41 44,462 100
T .E.S. (Fixed Rate) 2020 50,615 10
T .E.S. (Fixed Rate) 2022 237,876 49
Total 488,747 100 44,462 100
The net result of the assessment of marketable investments of fixed income has a remarkable
reduction during year 2013 regarding the result of 2012 in $61,989 equivalent to 82.6%, result of
the fluctuation in the valuation rates.
As of December 2013 and 2012 there are no legal and economic restrictions for the transfer of
investments.
5. LOAN PORTFOLIO
As of December 31 the account was detailed as follows:
25
Portfolio as of December 31, 2013
RISK RATING COMMERCIAL(1) PROVISION LEASING (1) PROVISION CONSUMER PROVISION HOUSING PROVISION NET
CATEGORY A 4,228,600 (35,424) 60,487 (612) 2,371,715 (40,312) 545,772 (5,458) 7,124,768
CATEGORY B 101,545 (4,310) 71,024 (5,415) 14,732 (471) 177,105
CATEGORY C 48,087 (5,192) 26,311 (3,291) 4,248 (425) 69,738
CATEGORY D 29,136 (16,549) 42,220 (32,241) 4,402 (925) 26,043
CATEGORY E 4,808 (4,808) 38,864 (38,864) 7,218 (4,111) 3,107
Subtotal 4,412,176 (66,283) 60,487 (612) 2,550,134 (120,123) 576,372 (11,390) 7,400,761
Pro-cyclical Provision - (22,717) - (37,663) - - (60,380)
General Provision - - - - - (5,763) (5,763)
Total 4,412,176 (89,000) 60,487 (612) 2,550,134 (157,786) 576,372 (17,153) 7,334,618
(1) The commercial portfolio includes leasing and commercial portfolio for a total amount of
$4,472,663 and a provision of $89,612.
Portfolio as of December 31, 2012
RISK RATING COMMERCIAL PROVISION CONSUMER PROVISION HOUSING PROVISION NET
CATEGORY A 3,880,908 (31,633) 2,149,768 (36,704) 421,917 (4,219) 6,380,037
CATEGORY B 74,043 (2,438) 45,181 (3,213) 23,294 (746) 136,121
CATEGORY C 25,917 (4,393) 22,553 (3,406) 3,134 (704) 43,461
CATEGORY D 22,554 (11,507) 19,556 (16,705) 1,586 (845) 14,639
CATEGORY E 4,176 (4,175) 40,069 (40,069) 7,029 (5,037) 1,993
Subtotal 4,007,598 (54,146) 2,277,127 (99,737) 456,960 (11,551) 6,576,251
Pro-cyclical Provision - (21,393) - (34,765) - - (56,158)
General Provision - - - - - (4,570) (4,570)
Total 4,007,598 (75,539) 2,277,127 (134,502) 456,960 (16,121) 6,515,523
6. OTHER ASSETS, NET
By provision of the Financial Superintendency in Colombia, the Parent Company removed the
goodwill of Corpbanca Investment Trust for an amount of $38,631.
The value of the purchase of Corpbanca Investment Trust was $80,257 generating an excess in
the value of the purchase for an amount of $38,631, amortized to 5 years, such value is the result
of the difference between the value of the purchase and the equity value on the date of purchase
that was for an amount of $41,626.
Below we observe the value of the excess of the purchase of the trust company as well as the
amortization made in 2013:
26
Concept Balance Dec. 2012
Additions Amortizations Balance Dec. 2013
Excess of the Cost of Trust Company 38,631 (11,589) 27,042
Total - 38,631 (11,589) 27,042
Deferred Charges and Prepaid Expenses
As of December 31, 2013 and 2012, the detail of the account of deferred charges and expenses
paid in advance is shown as follows:
Prepaid expenses
Concept Balance Dec. 2012
Additions Uses Balance Dec. 2013
Insurance 676 1,025 (999) 702 Others 14,192 16,582 (10,494) 22,280
Subtotal 14,868 17,607 (11,493) 20,982
Deferred Charges
Concept Balance Dec. 2012
Additions Amortizations Balance Dec. 2013
Renovations 310 - (191) 119 Computer programs 36,082 12,649 (24,435) 24,296 Improvements to leased properties 10,689 1,690 (2,010) 10,369 Deferred tax 19,493 51,820 (50,161) 21,152 Tax on equity (1) 23,084 117 (11,659) 11,542 Others 498 1,414 (503) 1,409
Subtotal 90,156 67,690 (88,959) 68,887
Total 105,024 85,297 (100,452) 89,869
Appraisals
Below we observe the detail of the appraisals as of the cut-off date December 31, 2013 and 2013:
Concept
2013 2012
Property and equipment 4,956 4,898
Available-for-sale investments 46,127 5,955
Art works 3,822 3,822
Sub-total 54,905 14,675
Valorization/appraisals (159)
(121)
Total 54,746 14,554
Valorizations are the result of comparing the net replacement value in the case of appraisals or
intrinsic value minus the adjusted cost of the asset, with the permanent condition that the
commercial value must be higher.
27
As of December 31, 2013, the appraisal of available-for-sale investments increased in $40,172
mainly for the appraisal of the shares of Helm Bank.
Trust Rights, net
The parent company closed as of December 31 with trust rights on realizable property, received in
payment and returned property for $496, which are fully provisioned.
As of December 31, the detail of Other Assets, Net was as follows:
Concept 2013 2012
Credits to employees 88,664 76,862
Prepayment of Income Tax 42 823
Judicial deposits 1,858 3,846
Goodwill (1) 846,441 38,150
Other Assets 5,691 4,322
(-) Provision of Credits to Employees (2,343) (1,869)
(-) Other Provisions (1,255) (805)
Total 939,098 121,329
(1) Goodwill (Helm Bank)
The goodwill resulted from the purchase of 4,043,966,379 shares, equivalent to 87.4215% of the
total of outstanding shares of Helm Bank S.A.,
The purchase operation of this investment was authorized by means of Resolution 1370/2013 of
the Financial Superintendency in Colombia, in which there is no objection for the merger by
means of three successive operations.
In order to comply with chapter XVII of the Basic Accounting and Financial Circular Letter of the
Financial Superintendency in Colombia, the Bank hired the firm KPMG Advisory Services Ltda to
carry out the appraisal of this goodwill. The documents of submission of the experts that will carry
out such appraisal were approved by the Financial Superintendency in Colombia on December
02, 2013.
For the appraisal of the Company Helm Bank, it was necessary to apply the methodology of
discount of cash flows using the cash flow of the shareholder. This is because the company
belongs to the financial sector and this type of flow provides a more accurate result about the
market value of the equity of the company.
The discount rate used for this appraisal was the rate of the cost of capital due to the nature of the
flows to discount. This rate equals 12.3%
28
The price paid by the purchaser, in this case CorpBanca Colombia S.A., for 87.4215% was
$2,178,379, generating a goodwill acquired for an amount of $905,920, whose operation is
summarized below:
Date of Purchase
No. shares purchased
% purchased
Equity Value as of
the purchase date (*)
Investment Value
Paid Value Goodwill Value
August 06, 2013
2,387,387,295 51.6 1,451,107 748,915 1,286,023 537,108
August 29, 2013
1,656,579,084 35.8 1,461,942 523,544 892,356 368,812
4,043,966,379 87.4 1,272,459 2,178,379 905,920 (*) Equities according to dates set out in Chapter X of the CBCF
(*) According to Chapter X of the Financial Superintendency in Colombia the purchase recorded
on August 06 was calculated with the financial statements dated July 31, 2013 and for the
purchase recorded on August 29, the closed financial statements as of August 31, 2013 were
considered.
As of December 31, this balance is as follows:
Initial Goodwill Value Amortized Value % Amortized Balance to Amortize 12/31/2013
905,920 59,476 6.6% 846,441
Figures stated in million COP
The allocation of the goodwill generated by business line was made according to the global
interest of each business, which will be amortized during the period of five (5) years, exponentially
according to the following table:
29
Years
Annual Amortization %
Allocation of Business Lines Amortization Value
Outstanding Amortization
Value Commercial and Leasing
Consumer (Includes Housing)
Credit Cards and Others
(SMEs)
Subsidiaries
Value % Value % Value % Value %
905,920
1 17.4% 90,180 57%
27,231 17%
16,511 10%
23,943 15% 157,865 748,055
2 18.6% 96,397 29,108 17,649 25,594 168,748 579,307
3 19.9% 103,043 31,115 18,866 27,358 180,381 398,926
4 21.3% 110,146 33,260 20,166 29,244 192,817 206,109
5 22.8% 117,741 35,551 21,556 31,261 206,109 -
Total
100.0% 517,508 156,264 94,748 137,400 905,920
Below each of the business segments are described:
Commercial and Leasing Line: Banking business of credit granting, which is made with
business legal persons and the solidary sector, except for the businesses with small and medium
enterprises – SMEs (contained in the SME line) whose purposes is to finance commercial or
business and financial leasing activities.
Consumer Line: It corresponds to all the credit granting business granted to natural persons not
included in the Credit Card line, in order to finance the purchase of consumer assets or the
payment of services for non-commercial or business purposes.
Housing Line: Credit line granted to natural persons addressed to finance the purchase of new
or used housing or the construction of a housing unit and that is granted in guarantee.
Credit Card Line: It corresponds to the banking business of consumer credit granting for the
purchase of goods and services, specifically by using the method of payment called credit card.
SME Line: Credit granting line to small and medium enterprises not included in the commercial
line in order to finance the economic activities of this segment of clients.
Subsidiaries Line: Line corresponding to own businesses of the subsidiaries Panamá, Cayman,
Trust and Stock Broker, specially represented in the foreign trade activity, trust operations and
operations in the stock market.
According to the provisions in Chapter XVII of the Basic Accounting and Financial Circular, the
impairment test will be conducted by a suitable expert at the closure of the first year, counted from
its date of initial registration.
30
7. DEPOSITS AND FINANCIAL CLAIMS
As of December 31, 2013 and 2012 the deposits and financial claims account was detailed as follows:
2013 2012
Checking accounts 895,122 1,031,331
Fixed-term deposit certificates
Less than 6 months 1,114,265 434,894
Between 6 and 12 months 996,422 984,701
Between 12 and 18 months 321,716 620,798
More than 18 months 1,940,689 2,039,301
SUBTOTAL 4,373,092 4,079,694
Savings deposits 1,487,782 1,410,659
Financial claims for banking services 68,139 58,472
Banks and correspondents 17,835 15,083
Collection banking services 2,887 1,592
Other 7,861 17,365
Total 6,852,718 6,614,196
This item has an increase in 2013 of $238,522, mainly generated by the greater gathering of public funds, through term deposits amounting to $293,398.
8. LIABILITY POSITIONS IN MONEY MARKET AND RELATED TRANSACTIONS
In this item there are the funds received by the parent company at sight for interbank credits and
commitments of repurchase of investments. The resulting difference between the present value
and the future value constitutes a financial expense for interests recognized in the terms agreed.
The weighted average effective interest rate paid during the year 2013 and 2012 reached 3.2%
and 5.0%, respectively, for interbank credits and repurchase agreements, including the
commitments for simultaneous operations. The monthly average cost paid during year 2013
corresponding to interbank credits operations and commitments of repurchase of investments and
simultaneous amounts to $1,578, while for 2012 it was $1,392.
None of the operations made by these items presents restrictions of right for granting guarantees
with the related securities.
The average in the negotiation term by the parent company during the year 2013 and 2012 did not
exceed 30 days, except for those entered into with the Central Bank, in order to regulate the
liquidity of the economy through monetary contraction operations.
As of December 31, the balance was detailed as follows:
31
2013 2012
Interbank Funds Purchased 66,000 22,000
Repurchase Agreement 736,301 -
Total 802,301 22,000
9. BANK LOANS AND OTHER FINANCIAL LIABILITIES
Legal Tender:
The only purpose of the assignment to the Bank of loans and discounts thereon by the Central
Bank, the Foreign Trade Bank and other bodies through the utilization of several existing credit
lines is to finance operations in development activities, in accordance with the norms currently in
force and effect.
Traditionally, the Parent Company does not grant collateral to backup these types of liabilities.
Hereinafter is a breakdown of balances in each credit-line granted by rediscount entities as of
December 31, 2013 and 2012, as follows:
Legal Tender
Detail Short Term Rate Medium Term Rate Long Term Rate Total Interest
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Bancoldex 444 375 7.8% 5.7% 3,564 1,083 3.6% 5.7% 3,165 - 3.0% - 7,173 1,458 6.4 5.0
Finagro 1,738 213 4.2% 6.1% 2,160 8,355 4.9% 5.9% 210 693 4.9% 6.1% 4,108 9,261 19 52
Findeter - - - - 8,120 3,749 2.7% 5.4% 1,691 13,749 1.2% 3.2% 12,811 17,498 64 143
Sub–Total 2,183 588 13,844 13,187 8,066 14,442
24,092 28,217 89 200
Foreign Currency reduced to Legal Tender
Detail Short Term Rate Medium Term Rate Long Term Rate Total Interest
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Bancoldex 105,144 116,815 3.0% 3.2% 22,148 48,977 3.3% 4.0% 2,113 5,063 4.2% 4.0%
129,405 170,855 296 753
Foreign banks
596,752 501,577 2.1% 1.8% - - - 0.0% 148,365 - - - 745,118 501,577 1,339 2,471
Sub–Total 701,896 618,392 22,148 48,977 150,478 5,063 - 874,523 672,432 1,635 3,224
Total 704,079 918,980 35,992 62,164 158,544 19,505 - 898,615 700,649 1,724 3,424
Foreign financial liabilities are contracted with foreign correspondent banks with the purpose of making foreign-currency loans to clients so that they can finance foreign-trade operations and/or working capital.
32
10. ESTIMATED LIABILITIES AND PROVISIONS
As of December 31, this item included the following:
2013 2012
Taxes: Income and additional 7,700 35,736
Industry and commerce 3,704 4,933 Tax on equity (1) - 21,438
Property 36 50
Contributions and affiliations:
Ascredibanco 280 210
Other contributions and affiliations 232 145
Fines, sanctions, litigation, indemnities and lawsuits 14,430 22,244
Sundry 14,706 28,556
Total 41,088 113,312
(1) Moreover, the item of tax on equity presents a change of 100% because for year 2012 it
was accounted as an accrued liability and as of the cut-off date it is recorded as an
account payable.
This account shows an increase of $72,212 versus the prior period, decreasing in (-64%), where
the income tax and additional item decreases in $28,037 due to the cancellation of self-
withholdings made during the year, which increased due to the entry into force of decree 2418
dated October 31, 2013 issued by the Ministry of Finance.
The fines, sanctions and litigations close year 2013 with a decrease of $7,814 corresponding to
the reintegration of provisions of labor compensations.
The Parent Company faces the following processes:
Type of process No. of Process Claims Value Provisions Value
Civil and administrative (1) 74 12,646 2,527 Public actions (2) 23 67,837 4,279 Work (3) 131 7,386 4,326
Total 228 87,869 11,132
Corpbanca Investment Trust Colombia S.A.
Type of process No. of Process Claims Value Provisions Value
Civil and administrative (4) 1 67 67
Total 1 67 67
Corpbanca Investment Valores Colombia S.A.
Type of process No. of Process Claims Value Provisions Value
Civil and administrative 1 - -
Total 1 - -
33
(1) Within these processes, 55 have a remote likelihood of loss, 8 have a possible likelihood
of loss and 11 are deemed probable.
(2) Within the popular actions, 3 affect the financial sector, 16 of the popular actions have a
remote likelihood of loss and 7 are deemed probable.
(3) Within the labor processes, 50 have a remote likelihood of loss, 33 processes have a
possible likelihood of loss and 48 are deemed probable.
(4) As of December 31, 2013 and 2012, Corpbanca Investment Trust records a process against it
before the 39 Civil Circuit Court, which is in its second instance. The claims of the process
against amounted to $67,000 for fees and other concepts incurred in the development thereof.
(5) There is no claim that the purpose of the lawsuit is to declare nullity of agreement 01/2004
executed between the UT comprised by the branch in Colombia of Santander Central Hispano
Investment S.A. (now liquidated) and Santander Investment Valores Colombia S.A. Comisionista
de Bolsa (now CorpBanca Investment Valores) with Financiera Eléctrica Nacional – FEN to
support the privatization process of Ecogas for affecting equity and administrative morality.
The administrative processes before the tax authorities amount to $3,537, from which $1,775 were provisioned and correspond to processes for annual declarations of industry and trade with the municipality of Cartagena, which is in lawsuit. 11. MINORITY INTEREST
According to the norm of the Financial Superintendency in Colombia, it reclassified to liability
5.06% of the minority interest on the subordinate’s equity balance CorpBanca Investment Valores
for years 2012 and 2013 and 5.49% for year 2013 and 2012 on the subordinate CorpBanca
Investment Trust, as follows:
December 31, 2013
Cival
Subordinate
Balance
Minority
Interest
(5.06%)
Capital Stock 1,500 76
Reserves 1,339 68
Premium in paid-in shares 1,500 76
Valuation of available-for sale investments 1,947 99
Equity reappraisal 1,429 72
Results for the period 485 25
Profits from prior periods 7,131 361
Subtotal 15,331 776
34
Citrust
Subordinate
Balance
Minority
Interest
(5.4991%)
Authorized Capital 8,533 469
Premium in paid-in shares 4,273 235
Reserves 36,117 1,986
Other Reserves 467 26
Surplus for Investments appraisals 237 13
Profit for the period 7,845 421
Subtotal 57,472 3,160
Total 3,936
December 31, 2012
Cival
Subordinate
Balance
Minority
Interest
(5.06%)
Capital Stock 1,500 76
Reserves 1,339 68
Premium in paid-in shares 1,500 76
Valuation of available-for sale investments 2,611 132
Equity reappraisal 1,429 72
Results for the period (3,306) (167)
Profits from prior periods 10,437 528
Subtotal 15,510 785
Citrust
Subordinate
Balance
Minority
Interest
(5.4991%)
Capital Stock 8,533 469
Premium in paid-in shares 4,273 235
Reserve 26,662 1,466
Other Reserves 391 21
Surplus for Investments appraisals 246 14
Profit for the Period 9,818 540
Subtotal 49,923 2,745
Total 3,530
35
12. EQUITY
Capital stock
Subscribed and paid-in capital of the parent company as of December 31, 2013 consists of
ordinary shares for a total issued of 753,566,429 shares, with $525.11 par value per share, for a
subscribed and paid-in capital of $395,705.
During August 2013, 2 capitalizations were performed, where Banco Corpbanca and other
shareholders participated, redefining the shareholding structure in percentage terms as of
December 31, 2013 as follows:
Investor
Shares
Balance
Dec/12
% Interest
Dec/2012
Capital
Balance
Dec/12
# of shares
issued -
2013
Capitalization
2013
Shares
Balance
Dec/13
%
Interest
Dec/2013
Capital
Balance
Dec/13
Corpbanca 382,933,612 91.9 201,082 117,341,839 61,617 500,275,451 66.4 262,700
CG Financial Colombia SAS - 62,520,726 32,830 62,520,726 8.3 32,830
Comercial Camacho Gomez SAS - 52,615,595 27,629 52,615,595 7.0 27,629
Inversiones Timon - 50,958,825 26,759 50,958,825 6.8 26,759
Inversiones Carron - 43,147,272 22,657 43,147,272 5.7 22,657
Inversions CorpGroup Internhold
Ltda. 30,785,838 7.4 16,166 30,785,838 4.1 16,166
Kresge Stock Holding Company Inc. - 10,439,451 5,482 10,439,451 1.4 5,482
Minority investors 2,823,151 0.7 1,482 2,823,151 0.4 1,482
GC Investment Colombia 120 0.0 120 0.0
Total 416,542,721 100 218,731 337,023,708 176,975 753,566,429 100 395,705
As of December 31 it was broken down as follows:
2013 2012
Authorized capital 488,731 238,731
Subscribed and paid-in capital 395,705 218,731
Number of subscribed and paid-in shares 753,566,429 416,542,721
Par value per share 525.11 525.11
Reserves
2013 2012
For appropriation of liquid profits 382,093 241,151
Premium in paid-in shares 1,910,747 170,074
Reserve decree 2336-95 90,955 90,514
Other reserves 2,533 2,533
Total 2,386,328 504,272
36
The increase in the premium in placement of shares arises from the capitalization made in
August, whose investors were:
Investors Date Total
Capitalization Capital
Premium in
placement of
shares
Corpbanca 666,263
Inversions CorpGroup 354,991
Total 08/06/2013 1,021,254 94,448 926,806
Inversiones Timon 289,342
Inversiones Carron 244,989
Comercial Camacho Gomez SAS 298,750
Kresge Stock Holding Company Inc. 59,275
Total 08/29/2013 892,356 82,527 809,829
TOTAL 1,913,610 176,975 1,736,635
Surplus
As of December 31 the balance of the surplus account was broken down as follows:
2013 2012
Properties and equipment 4,956 4,898
Works of art 3,822 3,822
Available-for sale investments 44,022 18,076
Debt securities (5,085) 58,630
Subtotal 47,715 85,426
(-) Devaluations (157) (121)
Total 47,556 85,305
As of December 31, 2013 this amount presents a decrease of a net value of $35,590, which is mainly represented by the appraisal of the Investment in Helm Bank for $39,739 and a decrease in the appraisal of the investments in debt securities for $53,545, caused by the loss in market value, as a result of the increase in the interest rates of papers, especially TES.
Coverage
As of December 31, 2013, the balance in the valuation of coverage is as follows:
2013 2012
Cash flow coverage (55.00) 0.00
13. TRANSACTIONS WITH RELATED COMPANIES
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During 2013 the Parent Company maintains a 94.4% share in CorpBanca Investment Valores
S.A. Comisionista de Bolsa and it additionally holds a 94.5% interest in Corpbanca Investment
Trust S.A., Compañía Fiduciaria.
Transactions with these companies, where as of December 31, 2013 it owns a domain greater
than 50%, are summarized as follows:
Corpbanca Investment Valores S.A.
Comisionista de Bolsa
2013 2012
Checking account deposits 11,805 11,024
Commissions, leases and interest revenues 1063 845
Dividend revenues - 0
Commissions and interest expenses 845 80.00
Corpbanca Investment Trust S.A. Compañía
Fiduciaria
2013 2012
Checking account deposits 18,300 15,512
Commissions Accounts receivable 4 5
Commissions accounts payable 4 6
Commissions, leases and interest revenues 1,147 1,151
Commissions and interest expenses 591 167
Helm Bank S.A.
As of December 31, 2013 Banco Corpbanca has swap operations, IRS- Interest Rate Swaps, with
Helm Bank as follows:
Operation # Contracting Date Expiration Date Par Value Flow receivable
(Right Value)
Payable flow
(Obligation Value)
Market Value
(Prof/(-)Loss)
135100 03152013 03222016 5,000 412 (451) (39)
139584 04102013 04142014 10,000 321 (327) (6)
139683 04102013 02142014 10,000 495 (519) (24)
143982 04292013 11042014 10,000 519 (498) 21
154115 06142013 06182015 10,000 543 (593) (50)
158763 07032013 07052016 12,875 1,428 (1,682) (254)
158766 07032013 07052017 10,000 1,932 (1,629) (304)
180080 06252013 12292014 10,000 504 (642) (138)
33477 10072011 10072014 278 278 (280) (1)
68210 04202011 04242014 10,000 158 (266) (108)
68658 04242012 04282014 10,000 158 (269) (110)
76898 05302012 05292015 5,000 5,012 (5,093) (80)
11,761 (12,249) (487)
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In September 2013, the purchase by the Bank to CG Investment Colombia S.A of the property
located in calle 12 was legalized, whose purchase price was $6,387, generating a non-operating
income of $4,390 for CG Investment Colombia SA.
Transactions held with related companies were performed under the general conditions prevailing
in the market for similar transactions
14. LEGAL CONTROLS
Regarding legal controls, in general terms, as of December 31, 2012 and 2013, the Parent
Company has complied with the delivery within the terms established by the entities that oversee
us and especially with the minimum and maximum limits, according to the current legislation.
Regarding the legal controls, we can clarify the following:
Legal Cash reserve
Through External Resolution 5 of 2008 issued by the Central Bank and External Circular Letter No.
058 issued by the Financial Superintendency in Colombia, the Parent Company maintained an
ordinary cash reserve on the deposits and financial claims in legal tender, according to the
percentages established for each concept. The Parent Company fully complied with this new limit.
During the period, the Parent Company complied with the cash reserve requirements established
through resolutions issued by the Board of Directors of the Central Bank and standards
established by the Financial Superintendency in Colombia.
Mandatory investments
During 2013, the Parent Company updated the forced investments in Class A and B Agricultural
and Animal Development Securities according to circular letters Nos. 006, 040, 065 and 180 of
2013 issued by the Financial Superintendency and Resolution No. 3 of 2000 issued by the Board
of Directors of the Central Bank.
The Parent Company complied with the modifications arising in External Resolutions 006 and 014
of 2008, issued by the Central Bank.
Own/Proprietary Position
According to the norms currently in force and effect issued by the Central Bank’s Board of
Directors, it is established the own/proprietary position regime (PP), spot market proprietary
position (PPC) and the gross leveraging position (PBA) in foreign currency of the exchange
market intermediaries.
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According to the aforementioned norms, the own/proprietary position in foreign currency of
exchange market intermediaries corresponds to the difference between the rights and obligations
denominated in foreign currency, recorded in and out of the balance sheet, made or contingent,
including those that are made in Colombian currency. During 2013 and 2012, the Parent
Company complied with the limits of its proprietary position, spot-market position and gross
leveraging position, established in the current legislation; this situation did not result in losses from
fines for the Parent Company.
The 2012 and 2013 Financial Statements do not record any provisions to attend requirements
corresponding to fines for these positions.
Solvency ratio
The minimum ratio required by legal norms is 9% on the assets weighted for risk. During 2013, the
Parent Company complied with this legal control, closing the period as of December 31 with a
23.93% ratio versus 11.88% as of the same period in 2012.
Regarding this control, the Parent Company has been working on actions aimed to maintain the
solvency levels required in the new regulation established in decree 1771/2012. On the other
hand, the actions to be taken during 2013 to fulfill the regulations of such decree, which start to
govern from August 01, 2013, were sent to the Financial Superintendency in Colombia. For
December 31, 2013, the total solvency ratio is equal to 23.09% and the basic solvency ratio is
equal to 17.08%
For all other legal controls established by current norms for financial entities, such as the margin of
investment in companies, fixed assets investment, minimum capital, minimum balance in the
Central Bank’s account and limit of asset transactions with foreign-currency financing, during
2013, the Parent Company showed neither surpluses nor shortages, as the case may be, per
these laws.
15. INTEREST AREAS
During 2013 the regulation that has incidence on the accounting and tax treatment for the Bank was issued, with application from 2013, which we explain below:
a) Price suppliers for valuation External Circular Letter 050 of November 30, 2012 amended external circular letters 006, 033 and 039 of 2012, which give the instructions to valuate investments by using the information provided by the price suppliers.
From February eighteenth (18th), 2013, the entities supervised by the Financial Superintendency shall assess their investments, by using the new scheme of Price Suppliers for Valuation, in i) fixed income securities, ii) variable income securities, iii) standardized derivative financial
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instruments, and iv) non- standardized derivative financial instruments whose underlying are exchange rate, interest rate, fixed or variable income, both new and already existent in portfolios.
Additionally, until June first (1st), 2013, investments in: i) exotic derivative financial instruments, ii) non- standardized derivatives financial instruments whose underlying is not included in the instruments mentioned in the letter above, and iii) structured products referred to in Chapter XVIII of the Basic Accounting and Financial Circular Letter, could be assessed by using the information provided by a price supplier for valuation who is contracted by The Bank or by means of the procedures described in the mentioned chapter
For a period of one year, the deferral of profits and/or losses must be individually performed for each of the investments and a net between them may not be set-off or established. Such profits and/or losses shall include the removal of the provisions established and the deferred amount for the amortization of the “swaps” derivative financial instruments At its meeting on April 23, 2013, the Board of Directors decided to amortize the full effects of the Swaps valuation, that were previously subject to amortization and which on such date amounted to $ 24,944, in the income statement.
b) Tax Reform (Law 1607 of December 26, 2012)
Some amendments to the Colombian tax regime for years 2013 and following are summarized
below, introduced by Law 1607 of December 26, 2012:
Income Tax and Supplementary: The rate on the taxable income of legal persons is modified to
25% from January 1, 2013.
Income Tax for Equity CREE: The income tax for equity is created from January 1, 2013. This
tax is calculated based on the gross revenues obtained, minus the revenues that do not constitute
income, costs, deductions, exempt income and capital gains; at a rate of 8%. For the years 2013,
2014 and 2015, the applicable rate will be 9%.
Within the cleaning of the base for the liquidation of the CREE tax, compensations of income for
the taxable period, with tax losses or presumptive income surplus from previous years are not
allowed.
Payment Exemption: Legal persons reporting the income tax payment and Complementary
taxes are exempted from parafiscal payment in favor of the Servicio Nacional del Aprendizaje –
SENA and the Instituto Colombiano de Bienestar Familiar – ICBF, corresponding to workers who
earn, individually, up to ten (10) minimum legal wages. This exemption began from the moment
the system of withholding for the collection of income tax for equity CREE was implemented,
which occurred on May 1, 2013.
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Accounting Rules: Provides that for tax purposes, the cancelations of debt included in the tax
standards to accounting rules will remain in force during the 4 years following the execution date
of the International Financial Reporting Standards. Consequently, during that time, the tax bases
of the items included in the tax returns will continue unchanged. Also, the requirements of
accounting treatments for the recognition of special tax situations will lose effect from the date of
application of the new accounting regulatory framework.
Obligation of the Business Groups to inform the consolidated financial statements: It
provides that, no later than June 30 of each year, economic and/or business groups duly
registered shall submit to the National Taxes and Customs Department their consolidated
financial statements, in magnetic means, together with the corresponding annexes.
c) Acquisition of Helm Bank:
The following relevant facts, which we detail below, have occurred from 2013 and during 2014:
The Financial Superintendency in Colombia, by means of Resolution 1370 of 2013,
declared no objection for the acquisition for purposes if merger by Banco CorpBanca SA
Colombia of 100% of the outstanding shares and shares with preferential dividend of Helm
Bank SA through three successive transactions: the first one made by the Bank on August
6, the second one made on August 29 and the third one made by means of a Public
Acquisition Offer with compliance on January 28, 2014, as follows (figures in Colombian
pesos):
First transaction: On August 6, 2013 Banco CorpBanca Colombia SA made the payment
for the amount of $1,286,023,381,722.93 Colombian pesos (USD$682,878,115) in favor of
various selling shareholders of Helm Bank SA, thereby achieving a share of 51.60% of the
total of issued and outstanding shares (including ordinary shares, shares with preferential
dividend and no voting rights) equivalent to 58.89% of the total of ordinary shares of such
financial entity, and thereby achieving an indirect interest in Helm Fiduciaria S.A., Helm
Comisionista de Bolsa S.A., entities of the financial sector incorporated in Colombia,
Helm Bank SA Panama, Helm Casa de Valores Panamá, entities of the financial sector
incorporated in Panama, and Helm Bank Cayman, constituting a control situation over
these companies.
As part of the strategy, on August 6, 2013 the Banco CorpBanca Colombia SA increased
its subscribed and paid-in capital to the amount of $313,178,382,159.89 pesos, from the
subscription and payment of new shares by CorpBanca e Inversiones CorpGroup
Interhold Limitada, and as a result of this, on such date the shareholding structure of the
Bank is as follows:
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STOCKHOLDERS SHARES % INTEREST
CorpBanca 500,275,451 83.88%
Inversiones CorpGroup Interhold
Limitada
93,306,564 15.64%
CG Investment Colombia S.A. 120 0.00002%
Minority Shareholders 2,823,155 0.47%
Second transaction: On August 29, 2013 the Bank made a second payment for the
amount of $892,356,012,382.24 Colombian pesos (USD$473,840,834) in favor of various
selling shareholders of Helm Bank SA, thereby increasing its interest up to 87.42% of the
total of issued and outstanding shares (including ordinary shares, shares with preferential
dividend and no voting rights) approximately equivalent to 99.75% of the total of ordinary
shares of such financial entity. On the same date, the Bank CorpBanca Colombia SA
increased its subscribed and paid-in capital up to the amount of $82,526,885,700
Colombian pesos from the subscription and payment of new shares by third parties. The
new shareholding structure on the date is shown below:
STOCKHOLDERS SHARES % INTEREST
CorpBanca 500,275,451 66.38%
Inversiones CorpGroup Interhold
Limitada 93,306,564 12.38%
CG Investment Colombia S.A. 120 0.00002%
Inversiones Timón S.A.S.
50,958,825 6.76%
Inversiones Carrón S.A.S.
43,147,272 5.72%
Comercial Camacho Gómez S.A.S.
52,615,595 6.98%
Kresge Stock Holding Company Inc.
10,439,451 1.38%
Minority Shareholders 2,823,151 0.37%
TOTAL 753,566,429 100.00%
As a result of the purchase of Helm Bank SA, the Bank recorded the Goodwill with a value
of $ 905,942, which will be amortized for accounting purposes for 5 years in accordance
with the provisions of Chapter XVII of the External Circular Letter 100 of 1995.
Third Transaction: In late December 2013 there was a communication on the
performance of the Public Acquisition Offer (OPA for its words in Spanish), for the shares
with preferential dividend and no voting rights issued by Helm Bank. On January 28, 2014,
99.38% of the offer of shares was accomplished for $306,075. This allowed increasing the
initial investment of Helm Bank in $188,056 and also generating a goodwill for $118,019,
which will be amortized on the same terms as the goodwill of the previous acquisitions.
Thus, the Bank reached an interest of 99.71% in Helm Bank.
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Currently the merger between Banco CorpBanca Colombia SA and Helm Bank is ongoing.
d) Other relevant aspects were:
On September 6, 2013, Banco CorpBanca Colombia SA registered in the Commercial
Registry the increase of its subscribed and paid-in capital, having the final amount of
$395,705,267,860.49 divided into 753,566,429 ordinary shares with $525.11 par value per
share.
In accordance with the provisions of the Law, on September 7 an agreement was reached
between the Bank and the major Unions, allowing agreeing on the collective bargaining
agreement that will govern for 2 years, effective from September 1, 2013 until August 31,
2015.
The launch of a Public Acquisition Offer (OPA) in late December for the shares with
preferential dividend and no voting rights issued by Helm Bank SA
The decision of liquidating the company Helm Bank SA (Cayman) in August 2013.
The filing in the Bank of a shareholders' agreement in August 2013.
The change of the Legal Representative of the holders of bonds issued by the Bank,
assigning Fiduciaria Fiducor S.A. in August 2013.
e) Convergence to the International Financial Reporting Standards:
In accordance with the provisions of Law 1314/2009, the Regulatory Decree 2784 of December
2012 and Decree 3024/2013, the Bank belongs to Group 1 of preparers of financial information
and therefore, on February 28, 2013 it submitted to the Financial Superintendency the IFRS
implementation plan.
The Status of Opening Financial Position as of January 1, 2014 must be submitted to the
Financial Superintendency no later than June 30, 2014 and the issuance of the first financial
statements under International Financial Reporting Standards will be on December 31, 2015.
The entities responsible for the preparation for the convergence and its proper compliance are the
board of directors, the audit committee and the legal representatives.
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Preparers of Financial information supervised by the Financial Superintendency must have
submitted, no later than January 30, 2014, a summary of the main policies for the creation of the
status of opening financial situation, stating the exceptions and exemptions in the application of
the regulatory framework and a preliminary calculation with the main qualitative and quantitative
impacts that are established. Additionally, they must define the technical regulatory framework in
accordance with IAS 1 and IAS 21 and the functional currency in which the financial and
accounting information will be recorded.
16. SUBSEQUENT FACTS
a. As explained in note 34 letter c, Banco Corpbanca reached a 99.71% share in Helm Bank
in January 2014 through a Public Acquisition Offer (OPA).
b. At the end of 2013, Banco CorpBanca Colombia and the International Finance Corporation
(IFC), entity member of the World Bank Group, and “IFC Capitalization Fund”, a fund
managed by “IFC Asset Management Company” signed a document called Note Purchase
Agreement by which, subject to the fulfillment of certain conditions, Banco CorpBanca
Colombia will acquire subordinated bonds for USD$170 million. Once issued, those will
expire in 10 years and will be paid at a variable rate. This issue is expected to be
performed in the first quarter of 2014.
c. Decree 2418/2013, brings the following changes for 2014:
- The source withholding is modified for other concepts from 3.5% to 2.5% from January 1,
2014
- Source withholding for financial yields mentioned in Decree 700/1997 is reduced from
7% to 4%
- Self-withholding on Repo and simultaneous operations and temporary transfer of
securities for 2.5% is created
- Self-withholding on interests in active credit transactions is created for 2.5%
- The basis on which the self-withholding for commissions is calculated is modified to 11%
d. On January 29, 2014, CorpBanca Chile signed an agreement called Transaction
Agreement with Inversiones Corp Group Interhold Limitada, Inversiones Saga Limitada,
Itaú Unibanco Holding S.A. and Banco Itaú Chile, under which these parties have agreed
on a strategic association of their transactions in Chile and Colombia, subject to the
condition that the approvals from the regulatory entities and the shareholders of
Corpbanca and Banco Itaú Chile are previously obtained.
This strategic partnership will be structured by the merger of CorpBanca Chile and Banco
Itaú Chile. In order to strengthen and consolidate operations in Colombia and subject to the