**2. Colombian banking sector**

In 1923 and through Law 25, the Banco de la República was created, the second central bank created in the region, a year before that had been created in Peru. According to [9], between the years 1922 and 1950, 17 central banks were created in the region under the guidance of Edwin Walter Kemmerer. Along with the approval of Law 25 of 1923, which established the organic status of the Banco de la República, Law 45 was approved, which regulated private banks and established the Banking Superintendency, seeking to allow the stable functioning of the Colombian financial sector [10]. In the nineties, the transition to a universal banking system began, with an emphasis on commercial banks. In [11], a scheme of subsidiaries and matrices was standardized, the structure of the sector and its services was redefined, and the entry and exit of markets were liberalized.

The financial crises of the twentieth century resulted in the closure of entities and processes of internal mergers and acquisitions, which consolidated the system in the early twenty-first century transforming the financial sector. According to [12], the period from 2002 to 2009 was characterized by an environment of economic recovery, by the high flows of foreign capital and by the increase in the services provided by the banks. During these years, the transformations led to a reduction in the number of financial institutions, which went from more than forty banks between mortgages and commercials, in the mid-1990s, to less than twenty in 2009. The same is true for [13], those between 1995 and 2009, the financial sector had a consolidation process.

In such a way that the competition for the market resumed, always with two big banks at the head, Bancolombia and Grupo Aval. But Banco Davivienda bought Bancafé and it became the third bank; Granahorrar was bought by BBVA, positioning itself as the fourth bank in the country. For the year 2008, 72% of the Colombian banking market was distributed as follows, in importance: Aval, Bancolombia, Davivienda, and BBVA.

For the last few years, and in global terms, it is observed that the Colombian financial sector is monopolized by a few financial groups, which through their business conglomerates offer an extensive portfolio of banking services, securities administration, insurance, investment fund management, layoffs, and pensions, among others. According to [14], for 2014, only 10 of the 33 m ost representative

**107**

Canada [20].

*The Colombian Banking Sector: Analysis from Relative Efficiency*

companies in the sector accounted for 68% of total investments: Bancolombia, Porvenir, Banco de Bogotá, Davivienda, Protección, BBVA, Banco de Occidente, Corpbanca, Banco Agrario, and Colpatria; of these 10, eight are banks. Regarding income, 61% of the total was concentrated in ten entities: 7 banks, 2 insurers, and one administrator of pension and severance funds: Bancolombia, Banco Agrario, Banco de Bogotá, Banco de Occidente, Davivienda, Protección, BBVA and Banco Corpbanca, insurer Suramericana, insurer Positiva, and Porvenir administrator. In relation to profits only 8 concentrated 66% of the total profits of the sector; among these are Bancolombia, Banco Agrario, Banco de Bogota, Banco de Occidente,

Davivienda, Banco Colpatria, Banco Popular, and Suramericana Vida.

For the year 2016, in Colombia, there are four important national financial groups with international operations: Grupo Aval, Grupo Bancolombia, Grupo

According to [15], the Aval Group is one of the most important financial groups in Colombia; even on its website, it calls itself "Colombia's largest financial group". Specifically, it is the largest financial conglomerate in Colombia and through of BAC Credomatic is the largest and most profitable regional group in Central America. It has four banks: Banco de Bogotá, Banco de Occidente, Banco Popular, and Banco AV Villas. Banco de Bogotá: it is the financial institution with the longest history in the country (founded in 1870), the second largest bank in Colombia by size of assets, and the largest company in the Aval Group due to its level of assets, deposits, and profits. Banco de Occidente: it is the fifth largest bank in Colombia by asset level and portfolio and the third largest bank in current accounts. Banco Popular: is a pioneer in the promissory note market and provides financial solutions for government entities in Colombia. AV Villas Bank: it has gone from being exclusively focused on housing loans, to be a consumer-oriented universal bank; it is the group's most active bank, in the use of nontraditional channels: mobile banking, nonbank cor-

Another of the important groups is the Grupo Bancolombia, which denotes that 142 years have passed since its birth [16]; this group originated from the merger of the Bank of Colombia and the Industrial Colombiano Bank, later merged with Conavi (2005) and Confisura. Bancolombia is the largest private bank in the coun-

The Grupo Empresarial Bolívar is a conglomerate of companies that are coordinated and controlled through Sociedades Bolívar. Banco Davivienda belongs to this group, which originated in the Colombian Savings and Housing Corporation, Coldeahorro (founded in 1972) and the Superior Banks (merger in 2005) and Granbanco-Bancafe [18]. In mid-2017 and according to the information on its website [19], it is consistently positioned among the first three banks in the country,

The Grupo Colpatria—Red Multibanca has a banking unit (bank and fiduciary), a construction unit, an investment unit, and Colfondos. In October 2011, Colpatria,

with a record number of customers for 2016 of 7,714,552 and 593 offices.

the group's holding, announced the Bank's new partner: the multinational Scotiabank, with whom they signed a long-term strategic alliance; this multinational institution is one of the main financial institutions in North America and

The international financial groups with presence in Colombia are: BBVA,

Grupo BBVA: is composed of a Spanish banking entity with over a century and a half of experience, which after mergers and acquisitions both nationally and internationally, is currently the Grupo BBVA. According to [21], in 1996, it made a presence in Colombia through the purchase of 40% of Banco Ganadero; in 2004, it was renamed BBVA Colombia, and in 2006, it merged with Banco Granahorrar.

*DOI: http://dx.doi.org/10.5772/intechopen.84585*

Bolívar, and Grupo Colpatria.

respondents, and virtual branches.

try due to the size of its equity and assets [17].

Citibank, GNB Sudameris, and Corpbanca.

## *The Colombian Banking Sector: Analysis from Relative Efficiency DOI: http://dx.doi.org/10.5772/intechopen.84585*

*Accounting and Finance - New Perspectives on Banking, Financial Statements and Reporting*

the primary objective of making active credit operations.

years were there better results of relative efficiency?

the entry and exit of markets were liberalized.

Bancolombia, Davivienda, and BBVA.

**2. Colombian banking sector**

legal currency resources from the public, either in sight deposits (savings accounts and current accounts) or in term deposits (CDT and CDAT'S), to place them again through loans, discounts, advances, or other active credit operations. According to [7], being watched by the SFC means that there is an institution that authorizes and monitors the activity carried out by entities that receive monies from the public, where you save, invest your capital, and have a loan, insurance, or your pension. According to Decree 663 of April 2, 1993, published in the Official Gazette No. 40, 820, Organic Statute of the Financial System [8], in its Article 2 it is made explicit that the main function of banking establishments is the capture of resources in bank current account, as well as the collection of other sight or term deposits, with

Given the importance of the banking sector worldwide, this research analyzes the behavior of the Colombian banking sector during the last 15 years, using the nonparametric methodology data envelopment analysis (DEA) to generate relative efficiency indicators for each of the banks and for every year throughout the study period; questions are answered: are there efficient banks throughout the period? What are the average efficiency levels of the sector for each year? In what year or

In 1923 and through Law 25, the Banco de la República was created, the second central bank created in the region, a year before that had been created in Peru. According to [9], between the years 1922 and 1950, 17 central banks were created in the region under the guidance of Edwin Walter Kemmerer. Along with the approval of Law 25 of 1923, which established the organic status of the Banco de la República, Law 45 was approved, which regulated private banks and established the Banking Superintendency, seeking to allow the stable functioning of the Colombian financial sector [10]. In the nineties, the transition to a universal banking system began, with an emphasis on commercial banks. In [11], a scheme of subsidiaries and matrices was standardized, the structure of the sector and its services was redefined, and

The financial crises of the twentieth century resulted in the closure of entities and processes of internal mergers and acquisitions, which consolidated the system in the early twenty-first century transforming the financial sector. According to [12], the period from 2002 to 2009 was characterized by an environment of economic recovery, by the high flows of foreign capital and by the increase in the services provided by the banks. During these years, the transformations led to a reduction in the number of financial institutions, which went from more than forty banks between mortgages and commercials, in the mid-1990s, to less than twenty in 2009. The same is true for [13], those between 1995 and 2009, the financial sector had a consolidation process. In such a way that the competition for the market resumed, always with two big banks at the head, Bancolombia and Grupo Aval. But Banco Davivienda bought Bancafé and it became the third bank; Granahorrar was bought by BBVA, positioning itself as the fourth bank in the country. For the year 2008, 72% of the Colombian banking market was distributed as follows, in importance: Aval,

For the last few years, and in global terms, it is observed that the Colombian financial sector is monopolized by a few financial groups, which through their business conglomerates offer an extensive portfolio of banking services, securities administration, insurance, investment fund management, layoffs, and pensions, among others. According to [14], for 2014, only 10 of the 33 m ost representative

**106**

companies in the sector accounted for 68% of total investments: Bancolombia, Porvenir, Banco de Bogotá, Davivienda, Protección, BBVA, Banco de Occidente, Corpbanca, Banco Agrario, and Colpatria; of these 10, eight are banks. Regarding income, 61% of the total was concentrated in ten entities: 7 banks, 2 insurers, and one administrator of pension and severance funds: Bancolombia, Banco Agrario, Banco de Bogotá, Banco de Occidente, Davivienda, Protección, BBVA and Banco Corpbanca, insurer Suramericana, insurer Positiva, and Porvenir administrator. In relation to profits only 8 concentrated 66% of the total profits of the sector; among these are Bancolombia, Banco Agrario, Banco de Bogota, Banco de Occidente, Davivienda, Banco Colpatria, Banco Popular, and Suramericana Vida.

For the year 2016, in Colombia, there are four important national financial groups with international operations: Grupo Aval, Grupo Bancolombia, Grupo Bolívar, and Grupo Colpatria.

According to [15], the Aval Group is one of the most important financial groups in Colombia; even on its website, it calls itself "Colombia's largest financial group". Specifically, it is the largest financial conglomerate in Colombia and through of BAC Credomatic is the largest and most profitable regional group in Central America. It has four banks: Banco de Bogotá, Banco de Occidente, Banco Popular, and Banco AV Villas. Banco de Bogotá: it is the financial institution with the longest history in the country (founded in 1870), the second largest bank in Colombia by size of assets, and the largest company in the Aval Group due to its level of assets, deposits, and profits. Banco de Occidente: it is the fifth largest bank in Colombia by asset level and portfolio and the third largest bank in current accounts. Banco Popular: is a pioneer in the promissory note market and provides financial solutions for government entities in Colombia. AV Villas Bank: it has gone from being exclusively focused on housing loans, to be a consumer-oriented universal bank; it is the group's most active bank, in the use of nontraditional channels: mobile banking, nonbank correspondents, and virtual branches.

Another of the important groups is the Grupo Bancolombia, which denotes that 142 years have passed since its birth [16]; this group originated from the merger of the Bank of Colombia and the Industrial Colombiano Bank, later merged with Conavi (2005) and Confisura. Bancolombia is the largest private bank in the country due to the size of its equity and assets [17].

The Grupo Empresarial Bolívar is a conglomerate of companies that are coordinated and controlled through Sociedades Bolívar. Banco Davivienda belongs to this group, which originated in the Colombian Savings and Housing Corporation, Coldeahorro (founded in 1972) and the Superior Banks (merger in 2005) and Granbanco-Bancafe [18]. In mid-2017 and according to the information on its website [19], it is consistently positioned among the first three banks in the country, with a record number of customers for 2016 of 7,714,552 and 593 offices.

The Grupo Colpatria—Red Multibanca has a banking unit (bank and fiduciary), a construction unit, an investment unit, and Colfondos. In October 2011, Colpatria, the group's holding, announced the Bank's new partner: the multinational Scotiabank, with whom they signed a long-term strategic alliance; this multinational institution is one of the main financial institutions in North America and Canada [20].

The international financial groups with presence in Colombia are: BBVA, Citibank, GNB Sudameris, and Corpbanca.

Grupo BBVA: is composed of a Spanish banking entity with over a century and a half of experience, which after mergers and acquisitions both nationally and internationally, is currently the Grupo BBVA. According to [21], in 1996, it made a presence in Colombia through the purchase of 40% of Banco Ganadero; in 2004, it was renamed BBVA Colombia, and in 2006, it merged with Banco Granahorrar.

Grupo Citibank: the history of Citibank in the world began in the United States in 1812, when the City Bank of New York (today Citibank) was founded [22]. Citibank Colombia is a Citigroup franchise. The group is composed of the controlling company, Citibank Colombia S.A. and the subordinates [23]. According to [24], Citi in Colombia opened the first branch in 1916; since 1986, it has organized according to the model of Consumer Banking and Corporate Banking.

Grupo GNB Sudameris: in 1920, the bank was born as a Colombian mercantile company; after acquisitions and sales in 2004 Banco Sudameris acquires the majority shareholding of Banco Tequendama and Servibanca. At the beginning of 2014, the incorporation of the HSBC operation was formalized. The group currently consists of the Banco GNB Sudameris and 7 companies [25].

Grupo Corpbanca: Banco CorpBanca was created in 1997 from the merger of Banco Concepción Chileno and Banco Corp Group. Since then, it has positioned itself in the Chilean market as the fourth most important bank. For [26], in 2012 arrived at the Colombian market. Currently, Banco Corpbanca Colombia has four subsidiary companies.

Otherwise, at the December 2016 cutoff and using the SFC as an information source, it can be seen that within the Colombian financial system, there are 25 banks that represent 11% of the total of the entities in the sector, but in terms of participation in assets, banks represent 93%. For example, savings and housing cooperatives have a 78% stake in the entities, but only 2.1% participation in the sector's assets. Within the aforementioned 25 banks, there are 14 national (including the two cooperatives owned), 10 foreign, and one public.

According to [27], the banking sector closed in 2016 with total assets of \$ 5 48 billion, an increase of 8.6% over the previous year and 126% in relation to the result for 2010, with an increasing trend in this period; the entities with the greatest assets at the end of 2016 are the Bancolombia, the Banco de Bogotá and Davivienda.

With respect to the gross portfolio, 2016 closed with \$ 39 4 billion, representing an increase of 12% with respect to 2015 and 148% with respect to 2010, with an ever-increasing trend. By the end of 2016, the commercial portfolio of the banking sector participates with 58%, while the consumer portfolio with 27%, housing with 13%, an d microcredit with only 3%; these shares are very similar to those of the immediately previous year.

Looking at the behavior of the liability, it is established that at the end of 2016, it is 475 billion with a growth of 9% for this last year, and between the years 2010 and 2016 with a growth of 125% with an ever-increasing trend. The ratio between the granted portfolio and the deposits of the public (savings, CDT, and current accounts) for the sector is 0.92, which represents that the sector for each peso that captures places only 0.92 pesos.
