Galicia Financial Group
Encyclopedia
Galicia Financial Group (Grupo Financiero Galicia, or GFG) (BCBA
: GGAL) is a financial services holding company based in Buenos Aires
, and its banking operations are the fifth largest in Argentina
, as well as the largest among all domestically-owned private banks in the country.
immigrant community from that region (who were second only to Italian Argentine
s in number).
The bank maintained over 2,500 accounts by the end of its first year, and in 1907, it was listed on the Buenos Aires Stock Exchange
and garnered nearly 3,300 initial shareholders. The Buenos Aires branches were followed by one in neighboring Montevideo
, Uruguay
, in 1910, and in 1921, it began offering time deposit
s (which remain the most common form of savings among the Argentine public).
Following the founder's death in 1948, his son, Eduardo Escasany, became its president and by 1960, he had secured a partenership with the Ayerzas and the Brauns, two influential local families prominent in the Argentine ranching and retail sectors, respectively. The Banco de Galicia became the largest, domestically-owned private bank in Argentina in 1965 and by 1975, ranked second to the public National Mortgage Bank in new home loans, and employed around 3,900 staff in 93 branches, nationwide. Banco de Galicia in 1993 became the first Latin American bank to enter both the U.S. and European stock markets, and the first to raise funds on the U.S. domestic capital market by floating a $200 million, ten-year Yankee bond. The following year it was the first to issue convertible bond
s on the international securities market
, enabling the bank to remain in Argentine hands at a time when many of its rivals were sold to Spanish banks
. A branch was opened in New York in 1994, and the group acquired a one-eighth share in the newly-privatized postal service. Banco Galicia established an insurance company, Sudamericana Holding S.A., in 1996 as a joint venture with The Hartford
.
The company's decision in 2000 to demolish its historic downtown Buenos Aires
headquarters in favor of a modern, 34-story building met with controversy, though the new offices were later completed. A family feud among the Escasany siblings led to the establishment in 2000 of the Banco de Galicia Foundation, which owns over 94% of the outstanding shares of Banco Galicia. Though a sell-off of public shares was averted, given the controversy, the Argentine economic crisis led to the loss of nearly half of the bank's deposits between 2001 and 2002, and to its near-insolvency, when its dollar-denominated debt of US$1.8 billion required borrowing on flexible terms from the Central Bank of Argentina; Escasany, who had also been chairman of the Argentine Banking Association, resigned as CEO in 2002. The bank recovered during 2003, however, when its losses of US$436 million were trimmed to US$73 million, and it has remained profitable in the ensuing years.
The façade and engineering for the new building was provided by Obras Metálicas S. A.
The bank remains the largest private sector commercial bank in Argentina ranked by deposits, assets or loans. As of April 2009, the group maintained 236 branches and total deposits in Argentina amounted to nearly US$ 4.5 billion, a 6% market share, and 7.6% among private sector depositors. Consolidated assets totaled US$ 7.7 billion and loans to the private sector, US$ 3.7 billion (6.5% of the market).
Besides its holdings in Banco Galicia, GFG participates in other business sectors through four companies: Grupo Sudamericana, an insurance holding company specialized in life, retirement, and hemeowner's policies; Galicia Warrants S.A., a warehouse rental services and issuer of certificate of deposits company; Net Investment, a holding company oriented to invest in Internet projects that can have synergies with Banco Galicia; and Galval Agente de Valores S.A., a wholly owned subsidiary of GFG, based in Uruguay
and created with the purpose of providing custody services.
Grupo Galicia Class B shares trade on the and on the Córdoba Stock Exchange while Grupo Galicia ADSs trade on the Nasdaq
Capital Market, both under the ticker symbol "GGAL." Grupo Galicia comprises the Buenos Aires Stock Exchange's blue-chip MERVAL Index and are included in the Morgan Stanley Capital International
and Standard & Poor's
indices, as well.
Buenos Aires Stock Exchange
The Buenos Aires Stock Exchange is the organization responsible for the operation of Argentina's primary stock exchange located at Buenos Aires CBD. Founded in 1854, is the successor of the Banco Mercantil, created in 1822 by Bernardino Rivadavia.Citing BCBA's self definition: "It is a...
: GGAL) is a financial services holding company based in Buenos Aires
Buenos Aires
Buenos Aires is the capital and largest city of Argentina, and the second-largest metropolitan area in South America, after São Paulo. It is located on the western shore of the estuary of the Río de la Plata, on the southeastern coast of the South American continent...
, and its banking operations are the fifth largest in Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
, as well as the largest among all domestically-owned private banks in the country.
Overview
The bank was founded in 1905 as the Banco de Galicia y Buenos Aires by a consortium led by Manuel Escasany, a jeweler and clock maker of Galician origin. The name referred to the Galician heritage of the Escasanys, the largest original shareholders, as well as to the Spanish ArgentineSpanish settlement in Argentina
Spanish settlement in Argentina, that is the arrival of Spanish emigrants in Argentina, took place firstly in the period before Argentina's independence from Spain, and again in large numbers during the late 19th and early 20th centuries...
immigrant community from that region (who were second only to Italian Argentine
Italian Argentine
An Italian Argentine is a person born in Argentina of Italian ancestry. It is estimated up to 25 million Argentines have some degree of Italian descent...
s in number).
The bank maintained over 2,500 accounts by the end of its first year, and in 1907, it was listed on the Buenos Aires Stock Exchange
Buenos Aires Stock Exchange
The Buenos Aires Stock Exchange is the organization responsible for the operation of Argentina's primary stock exchange located at Buenos Aires CBD. Founded in 1854, is the successor of the Banco Mercantil, created in 1822 by Bernardino Rivadavia.Citing BCBA's self definition: "It is a...
and garnered nearly 3,300 initial shareholders. The Buenos Aires branches were followed by one in neighboring Montevideo
Montevideo
Montevideo is the largest city, the capital, and the chief port of Uruguay. The settlement was established in 1726 by Bruno Mauricio de Zabala, as a strategic move amidst a Spanish-Portuguese dispute over the platine region, and as a counter to the Portuguese colony at Colonia del Sacramento...
, Uruguay
Uruguay
Uruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...
, in 1910, and in 1921, it began offering time deposit
Time deposit
A time deposit is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time...
s (which remain the most common form of savings among the Argentine public).
Following the founder's death in 1948, his son, Eduardo Escasany, became its president and by 1960, he had secured a partenership with the Ayerzas and the Brauns, two influential local families prominent in the Argentine ranching and retail sectors, respectively. The Banco de Galicia became the largest, domestically-owned private bank in Argentina in 1965 and by 1975, ranked second to the public National Mortgage Bank in new home loans, and employed around 3,900 staff in 93 branches, nationwide. Banco de Galicia in 1993 became the first Latin American bank to enter both the U.S. and European stock markets, and the first to raise funds on the U.S. domestic capital market by floating a $200 million, ten-year Yankee bond. The following year it was the first to issue convertible bond
Convertible bond
In finance, a convertible note is a type of bond that the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price. It is a hybrid security with debt- and equity-like features...
s on the international securities market
Securities market
Securities market is an economic institute within which take place sale and purchase transactions of securities between subjects of economy on the base of demand and supply....
, enabling the bank to remain in Argentine hands at a time when many of its rivals were sold to Spanish banks
Economy of Spain
The economy of Spain is the twelfth-largest economy in the world, based on nominal GDP comparisons, and the fifth-largest in Europe. It is regarded as the world's 20th most developed country....
. A branch was opened in New York in 1994, and the group acquired a one-eighth share in the newly-privatized postal service. Banco Galicia established an insurance company, Sudamericana Holding S.A., in 1996 as a joint venture with The Hartford
The Hartford
The Hartford Financial Services Group, Inc. , usually known as The Hartford, is a Fortune 500 company and one of America’s largest investment and insurance companies...
.
The company's decision in 2000 to demolish its historic downtown Buenos Aires
San Nicolás, Buenos Aires
San Nicolás is one of the neighbourhoods of the city of Buenos Aires, Argentina, sharing most of the city and national government structure with neighboring Montserrat and home to much of Buenos Aires' financial sector...
headquarters in favor of a modern, 34-story building met with controversy, though the new offices were later completed. A family feud among the Escasany siblings led to the establishment in 2000 of the Banco de Galicia Foundation, which owns over 94% of the outstanding shares of Banco Galicia. Though a sell-off of public shares was averted, given the controversy, the Argentine economic crisis led to the loss of nearly half of the bank's deposits between 2001 and 2002, and to its near-insolvency, when its dollar-denominated debt of US$1.8 billion required borrowing on flexible terms from the Central Bank of Argentina; Escasany, who had also been chairman of the Argentine Banking Association, resigned as CEO in 2002. The bank recovered during 2003, however, when its losses of US$436 million were trimmed to US$73 million, and it has remained profitable in the ensuing years.
The façade and engineering for the new building was provided by Obras Metálicas S. A.
The bank remains the largest private sector commercial bank in Argentina ranked by deposits, assets or loans. As of April 2009, the group maintained 236 branches and total deposits in Argentina amounted to nearly US$ 4.5 billion, a 6% market share, and 7.6% among private sector depositors. Consolidated assets totaled US$ 7.7 billion and loans to the private sector, US$ 3.7 billion (6.5% of the market).
Besides its holdings in Banco Galicia, GFG participates in other business sectors through four companies: Grupo Sudamericana, an insurance holding company specialized in life, retirement, and hemeowner's policies; Galicia Warrants S.A., a warehouse rental services and issuer of certificate of deposits company; Net Investment, a holding company oriented to invest in Internet projects that can have synergies with Banco Galicia; and Galval Agente de Valores S.A., a wholly owned subsidiary of GFG, based in Uruguay
Uruguay
Uruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...
and created with the purpose of providing custody services.
Grupo Galicia Class B shares trade on the and on the Córdoba Stock Exchange while Grupo Galicia ADSs trade on the Nasdaq
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
Capital Market, both under the ticker symbol "GGAL." Grupo Galicia comprises the Buenos Aires Stock Exchange's blue-chip MERVAL Index and are included in the Morgan Stanley Capital International
Morgan Stanley Capital International
MSCI Inc. is a provider of investment decision support tools to investment institutions. Products include indices, portfolio risk and performance analytics - for use in managing equity, fixed income and multi-asset class portfolios - and governance tools....
and Standard & Poor's
Standard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
indices, as well.