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Region: Corporate Radar

Intercorp bets on Peruvian growth: A recent profile by the Spanish newspaper El País highlighted the steady growth of the Peruvian conglomerate Intercorp, led by the extremely low-profile businessman Carlos Rodríguez-Pastor Persivale, known by his initials, CRP. According to the US magazine Forbes, CRP has assets worth US$2.3bn, making him the wealthiest businessman in the country; yet Peruvian media report that he is known only to have conceded one press interview.

At first glance, the Intercorp group looks like an almost random spread of unconnected businesses. It includes Interbank, Peru’s fourth-largest bank; an insurance company (Interseguro); a nationwide supermarket and hypermarket chain (operating under the Plaza Vea and Vivanda brands); a department store (Oeschle); chains of film theatres and pharmacies; hamburger and BBQ chicken fast food outlets (Bembos and Don Belisario); and even schools (Innova Schools) and a university.

However, those who follow the group closely say it has a clear strategic focus: its businesses are all designed to benefit from the growth of the Peruvian middle class. Interbank is the flagship of this approach within the wider group. According to General Manager Luis Felipe Castellanos, the bank’s customer service paradigm is the US coffee chain Starbucks. The bank has made a point of opening mini-branches in supermarkets and malls. These branches open late (until 9-10pm) and over weekends for the convenience of their customers. The formula seems to be working.

Brokers Credicorp Capital report that Interbank is currently the most profitable bank in Latin America, with a return on assets of 23%. For the moment however, Intercorp, which has been built up over the last twenty years, since CRP acquired control of Banco Internacional del Perú (later renamed Interbank), appears to have no overseas ambitions and continues to concentrate on the Peruvian market.

Itaú snaps up Citibank: Itaú Unibanco, Brazil’s largest private banking group, announced in October that it had bought Citibank’s network of Brazilian retail bank branches for BRL710m (US$221m). In a press release, the Brazilian bank said it was acquiring 71 Citibank branches, together with its loan book and insurance and credit card businesses. Itaú Unibanco was also acquiring Citibank’s stake in technology company TECBAN (Tecnología Bancaria). The takeover remains subject to regulatory approval by Brazil’s central bank and by CADE, the competition authority.

Colombia setback for Novartis: The Colombian government says that the anti-cancer drug Imatinib, sold in the country by Novartis under the brand name Glivec, will be roughly 40% cheaper as a generic drug. The change came after a government decision in June to end Novartis’ exclusive rights to sell the drug, and to allow its production as a generic medicine.

Health Minister Alejandro Gaviria said that the government had benchmarked the price of the drug in 17 different countries where it is sold as a generic drug, and concluded that the retail price should be reduced from 12 US cents per milligram to 7 US cents. Novartis had the exclusive rights to sell Imatinib in Colombia for 12 years, during which the public health system paid around US$22.8m per annum acquiring supplies of the medicine for patients.

The government had initiated talks to persuade Novartis to make a voluntary reduction in the price. Those talks failed to reach agreement, triggering the government’s decision to allow production of Imatinib as a generic medicine.

Pac Rim loses El Salvador mining dispute: Canadian and Australian-owned mining company Pac Rim Cayman has lost a long-standing arbitration dispute with the government of El Salvador at the World Bank’s International Centre for Settlement of Investment Disputes (Icsid). The case dates to 2009, when Pac Rim (subsequently acquired by Oceana Gold) said that El Salvador’s government had unfairly refused to grant it a concession to begin operations at its El Dorado mining project. It argued that government officials had encouraged it to invest in exploration activities, only to withhold permits once deposits had been discovered. Pac Rim’s demand for compensation and loss of profits initially ranged up to over US$300m, but eventually settled at US$250m.

However, the government of El Salvador countered that Pac Rim had failed to meet regulatory requirements for the requested permits, lacked environmental permissions, did not hold legal rights over much of the land required for the project, and failed to submit a final feasibility study.

The country’s attorney general, Douglas Meléndez Ruiz, said that the Icsid decision was a vindication for the people of Cabanas, who had been opposing the mine on the grounds that it would damage the environment, adding, “It is an important step for the country to have been victorious in this lawsuit”.

In a statement, Oceana Gold said it believed a modern resource industry operating in a safe and sustainable manner could unlock “a multi-decade development opportunity” for El Salvador, but that the government would need to “take positive and definitive steps towards establishing a stable business environment” if it wished to attract foreign investment.



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