Leasing in Colombia

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State of the market:

Columbia is experiencing strong growth in leasing which is a by-product of a strong growth in the GNP. The largest areas of activity are in industrial construction, transportation and telecommunications. The penetration of leasing was 17.7% in 1995 as compared to 15.9% in 1994. As is the case in Chile, the leasing sector provides the best profitability of all business segments. The average ROE in the leasing industry was high at 68.9%.

Leasing has been registering very sharp growth in Columbia - in 1993, the growth rate was 103% as compared to 120% in 1992.

However, beyond 1993, a number of events in recent years have had negative impacts on the leasing industry in Colombia, including the elimination of deductibility of lease payments for big industry, proposals for adverse legislation, et. As a result, the leasing industry's volume decreased from US$1.774 million in 1996 to $US 1.218 million in 1997.

The number of leasing companies have also been reduced by half.. Three ended up in liquidation or were taken over by the Bank Superintendency, 17 were bought by or merged with other, stronger companies. One company, Leasing de Occidente, acquired seven others, one of which had already absorbed another.

Leasing association:

Columbian Leasing Association
Carrera 9 no. 74-08 of. 1001 Edificio Profinanzas
Bogota Columbia

Law and regulations relating to leasing:

Law 74 of 1989 subjects leasing companies to the general supervision of Superintendencia Bancaria. Only permitted companies can engage in leasing business.

By the law 35 of 1993, leasing companies in Columbia are allowed to access public funds directly. Such companies, to be known as finance companies, will be subject to the regulation of the Superintendencia Bancaria.

The formation of a leasing company in Columbia has virtually the same formalities as a bank.

The legal definition of a lease has been adopted based on the UNIDROIT convention (for full text, see our laws section). This has been done by decree 913 of 1993.

Accounting:

Relevant links:

 

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