May 2009

Financial Profile

• Colombia’s Financial Market

• Private Equity in Colombia

• Value Proposition for Colombia´s Financial Market

• Frequently asked questions & answers

• Incentives & Services to investors

Financial SectorMarket Value

Source: Finance Superintendence

US$ MillionJuly 2008

Assets: 236.219,7Total Equity: 104.872,4Profits: 2.824,07

Financial Sector

A growing market in terms of assetsCAGR:15,8%

•Total Assets through July 2008 were at US$236 billion• Annual growth rate (July 08/ July 07): 13.3%•Lending entities represented 45% of total assets, followed by trusts with 26% and

pension funds with 15%

$73,202 $71,989 $74,323 $73,097

$94,549

$130,269

$150,846

$199,781

$236,219

0

50,000

100,000

150,000

200,000

250,000

2000 2001 2002 2003 2004 2005 2006 2007 2008

2008 Data through July Source: Finance SuperintendenceCalculated using average yearly exchange rates

Financial Sector

Steady interest rate levels since 2000

02468

101214161820

2000

2001

2002

2003

2004

2005

2006

2007

2008

%

Deposit s Placement s

Source: Central Bank

Financial Sector

55% penetration rate, a great opportunity for new players

Penetration rate calculated for population over 18 yearsSource: Asobancaria

Penetration Rate

GDP per capita: US$ 4,611People over 18 years old: 28 Million

52.0% 56.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

March 2007 March 2008

People w ith no f inanacial service People w ith at least 1 f inancial service

Number of ATM´s per 100.000 people

2007 DataSource: FELABAN – Economist Intelligence Unit

Financial Sector

Number of ATM´s in Colombia increased by 32% since 2004

32,0 31,1

25,0

19,516,6 15,6

11,68,9 8,1 6,9

15,0

0

5

10

15

20

25

30

35Bo

livia

Ecua

dor

Peru

Urug

uay

Colom

bia

Vene

zuela

Argen

tina

Mexic

o

Chile

Brazil

ATMs * Average Latin America

Financial Sector

As a percent of GDP, private sector credithas increased by 50% since 2004

73,1

41,2 37,130,8 30,2

19,3 18,1 17,5

0

20

40

60

80Ch

ile

Braz

il

Ecua

dor

Arge

ntina

Colom

bia

Mexic

o

Peru

Vene

zuela

Private sector Credit % GDP

*Total loans to the corporate and household sector

2007 DataSource: FELABAN – Economist Intelligence Unit

Note: Figures for July each year.Source: Finance Superintendence

Financial Sector

ROA & ROE since 200 have been on the rise

Financial Sector Returns (Does not include funds)

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2000 2001 2002 2003 2004 2005 2006 2007 2008

RO

A

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

RO

E

ROAROE

Financial Sector

Loan quality & coverage relation improving

Note: Figures through July 2008. Includes leasing, credit establishments and cooperatives.Source : Finance Superintendence

•Between 2000 and 2008 the loan quality improved from 13.1% to 4.1%

•At the same time the coverage rate rose from 38% to 114%

Loan Quality and CoverageLoan Quality: Past-due loans / Gross Total Loans

Loan Coverage: Provisions / Past-due Loans

0%

2%

4%

6%

8%

10%

12%

14%

Jan-

00A

pr-0

0Ju

l-00

Oct

-00

Jan-

01A

pr-0

1Ju

l-01

Oct

-01

Jan-

02A

pr-0

2Ju

l-02

Oct

-02

Jan-

03A

pr-0

3Ju

l-03

Oct

-03

Jan-

04A

pr-0

4Ju

l-04

Oct

-04

Jan-

05A

pr-0

5Ju

l-05

Oct

-05

Jan-

06A

pr-0

6Ju

l-06

Oct

-06

Jan-

07A

pr-0

7Ju

l-07

Oct

-07

Jan-

08A

pr-0

8Ju

l-08

Qua

lity

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

Cove

rage

QualityCoverage

Financial Sector

* Foreign Banks

Bank NameAssets (COP $ Millions) July 2008

Assets Assets (US$ Millions) July 2008

Market Share

Bancolombia 34,273,256 18,571 20.3%

Bogota 23,417,426 12,689 13.9%

Davivienda 20,031,690 10,854 11.9%

BBVA* 18,345,159 9,941 10.9%

Occidente 11,219,404 6,079 6.6%

Agrario 10,617,011 5,753 6.3%

Popular 8,648,844 4,686 5.1%

Caja Social BCSC 6,521,655 3,534 3.9%

Colpatria-GE* 6,345,278 3,438 3.8%

Citibank* 6,065,997 3,287 3.6%

Sudameris* 5,413,363 2,933 3.2%

Credito* 5,407,862 2,930 3.2%

Santander* 5,293,908 2,869 3.1%

AV Villas 4,859,071 2,633 2.9%

HSBC* 1,895,771 1,027 1.1%

ABN AMRO Bank* 588,969 319 0.3%

Procredit 60,540 33 0.0%

Total 169,005,205 91,577 100.0%

International banks account for 29.2% of the market share in Colombia

Source: Central Bank, “Reporte de Estabilidad Financiera”

Pension Funds

Total Pension Funds portfolio value has grownover 50% since 2002

•Total portfolio value in Jun 08, was approximately US$ 28 billion

Portfolio value of all Pension Funds

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Jan-0

2May

-02Sep

-02

Jan-0

3May

-03Sep

-03

Jan-0

4May

-04Sep

-04

Jan-0

5May

-05Sep

-05

Jan-0

6May

-06Sep

-06

Jan-0

7May

-07Sep

-07

Jan-0

8May

-08

US$

mill

ion

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

US$

mill

ion

Voluntary Severance Mandatory (right axis)

Source: Central Bank “Reporte de Estabilidad Financiera”

Pension Funds

Pension fund profitability in average 3.5%Above the minimum required

Mandatory Retirement Funds Profitability

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Mar 03

-Mar

06

Jun 0

3- Ju

n 06

Sep 03

-Sep

06

Dec 03

-Dec

06

Mar 04

-Mar

07

Jun 0

4-Ju

n 07

Sep 04

-Sep

07

Dec 04

-Dec

07

Average Min.Profitability

Pension Funds

More diversification of pensionfund assets

• Currently, Pension fund´s assets are dividied as follows:• 40% Local public debt• 20% financial institutions• 17% foreign assets• 21% Real Sector• 2$ other

Reforms in the regulatory system aim to make diversificationeasier.

Pension funds are now allowed to invest some of their capital inforeign assets and private equity funds.

Insurance Companies

Low insurance penetration makes Colombiaan attractive market

• The low penetration of insurance policies provides a great opportunity for newcomers to conquer the unattained market share

REGION (Premiums as % of GDP)

2.40%

4.70%

6.80% 6.90%

7.80%

8.70%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

latin America Africa Oceania Asia Europe North America

Source: FASECOLDA

Country (Premiums as a % of GDP)

1.20%

1.60%

1.80%

2.40%

2.60%

2.70%

2.70%

2.80%

3.30%

8.80%

10.50%

16.50%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%

Peru

Ecuador

Mexico

Colombia

Argentina

Panama

Venezuela

Brazil

Chile

USA

Japan

UK

Insurance Companies

A growing Market: Insurance Profits on the rise

Source: Finance Superintendence2005 profits were extraordinary due to the sale of Reaseguradoras de Colombia in which all of its investment portfolio was liquidated at great profits

US$ Million

4,373

10,159

57,047

67,719

102,381

398,100

1,389,065

7.111

Ecuador

Venezuela

Argentina

Peru

Colombia

Chile

Mexico

Brazil

Fourth capital market in South America

• Due to the market´s youth, the government and private companies are making an effort to promote the use of equity, and other capital tools like derivatives.

Market cap (2007)

Source: Valores Bancolombia & BVC

Capital Markets

Historic Market Cap

-

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

140,000.00

ju l-01nov -0 1mar-0

2ju l-02

nov -0 2mar-0

3ju l-03

nov -0 3mar-0

4ju l-04

nov -0 4mar-0

5ju l-05

nov -0 5mar-0

6ju l-06

nov -0 6mar-0

7ju l-07

nov -0 7mar-0

8ju l-08

Mill

ions

of U

SD

Ecopetrol IPO

US$ million

Capital Markets

Colombia´s stock index CWGR is52% over the last 7 years

IGBC Value

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.006/

29/2

001

12/2

9/20

01

6/29

/200

2

12/2

9/20

02

6/29

/200

3

12/2

9/20

03

6/29

/200

4

12/2

9/20

04

6/29

/200

5

12/2

9/20

05

6/29

/200

6

12/2

9/20

06

6/29

/200

7

12/2

9/20

07

6/29

/200

8

Source: Grupo AvalCWGR= Compunded weekly growth rate

Attractive Regulatory Framework

• No restrictions to invest in the financial sector in Colombia.

• Governed by a single entity:Finance Superintendence ( Law 964 of 2005)

• Minimum requirements: These have to be met by all supervised entities for risk control for money laundering and financing of terrorist activities. (SARLAFT)

• Creation of Private Equity fund regulation: Decree 2175 (Carteras Colectivas) in 2007. These will basically be any collection of funds or other assets of two or more people that will be invested collectively and will give collective economic results

• Regulation allowing Private Equity funds to invest in unlisted companies or in mixed portfolios. This was allowed when Resolution 470 of June 2005 entered into effect in 2006. One fund was established in 2006 under the framework, administered by the Finance Superintendence, another was close to becoming registered at end-2006 and another five were seeking registration.

• Diversification of Pension Fund investments: Pension funds may invest up to 5% of their portfolios in private equity funds, 40% in variable income assets, 40% in foreign titles, stocks or other participations , and 5% in foreign private equity funds.

Recent Investment Cases

Continental (Chile) (2008):• Opened a subsidiary• Investment: US$3.85 M

GE Money (United States) (2007):• Strategic alliance with Colombian Bank Colpatria• Investment: US$228 M

Cardif (France) ( 2007):•Invested in a subsidiary•Investment: US$ 4.4 M

HSBC (England) (2006):• Began activities in Colombia by opening

a subsidiary• Investment: US$1.170 M

QBE Group (Australia) (2005):• Purchase 97 per cent of the share Central de Seguros • Investment: US$ 21 M

Royal Bank of Scotland (2007)•Purcahses ABN operation in Colombia• Investment: US$ 100 MM for all transactions in LA

Financial Sector consolidation cases

GNB SUDAREMIS (Italy) (2001):• Increased capital in the Colombian subsidiary• Investment: US$ 3.91 MM

BBVA Group (Spain) (2000):•Acquired Pension Fund Colpatria •Purchase 92% of the share of Ganadero Bank •Acquired Granahorrar Bank •Investment:US$ 512.3 MM

ING (USA) (2007):•Acquired Santander´s Pension funds in LA•Investment: US$ 1.3 billion

Davivienda (2006 -2007):• Acquired 97.8% of the share of Superior Bank• Purchased 99 per cent of the share of Bancafe • Investment: US$ 1189.5 MM

Fiduciaria Bogotá S.A (2007):• Acquire 99% of the share of Fiducomercio S.A.•Investment: US$ 22.03 MM

Banco de Bogotà (2006):• Purchases 94.9% of the share Megabanco S.A• Investment: US$ 326.18 MM

Citi Bank (2006):• Purchases 20% of Colfondos

Suramericana (2006):• Purchases Agricula de Seguros•US$175 MM

Suramericana

• Colombia’s Financial Market

• Private Equity in Colombia

• Value Proposition for Colombia´s Financial Market

• Frequently asked questions & answers

• Incentives & Services to investors

Private Equity

EMPEA finds LATAM an attractive destinationfor Private Equity

• 78% growth in capital raised in 2007: Statistics from 2007 done by EMPEA (Emerging markets private equity association), show that PE funds that invest in emerging markets received US$59 billion in new capital in 2007

• US$ 25 billion raised between January and April of 2008.

• New opportunities: Emerging markets represent new opportunities with higher returns for these funds.

• 65% of surveyed funds plan commitments to invest in Latin America

Source: EMPEA

Private Equity

PE funds investment strategy shifting to LATAM

Source: EMPEA

Current EM Investment Strategy-Investing

5% 4%

61%

40%

30%

43%

68%

20%

79%

31%

11%

20%

57%

83%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Asia (ExJanz) CEE/Russia Latam/Caib. Middle East Africa

% o

f Res

pond

ants

200620072008

Private Equity

LATAM, second highest expected return

Source: EMPEA

Expected Returns

0%

5%

10%

15%

20%

25%

30%

Africa

Middel

East

Latam

/Car

ib.

CEE/Rus

sia Asia

All EM

s

US2007

2008

Private Equity

Colombia, 3rd most attractive country in LATAM

Countries in LATAM where funds intend to invest in the next 2 years

Source: 2008 Annual Latin America Private Equity Survey by KPMG, February 2008

Brazil

Mexico

C olombia

Argentina

C hile

Other

42%

34%

12%

5%

5%

2%

Private Equity

Already 7 funds investing more than US$100 million each

*Foreign Funds

Name City Sectors of investment Estimated Size of fund (US millions)

Inverlink Bogota Real Estate, infrastructure $500

Colpatria-GEM* Bogota Retail services(logistics, financial), energy $200

Estrategias Corporativas Bogota Real Estate $160

Aureos Capital* Bogota Invests in small to medium size companies $140

Tribeca Partners Bogota Health services, communications & technology, fashion $115

Altra Investments Bogota Cold chain, cosmetics, BPO, biofuels, hotels $100

Top Sales Capital Bogota Invests in small to medium size companies $100

LAEFM Colombia* Bogota Hidrocarbons, Forest $62

Andes Capital Bogota Agribusiness, hotels, industrial parks, technology, software, health, energy $50

SEAF Colombia* Bogota Helath, services $17

Brookfield* Bogota Infrastructure, energy NA

Corficolombiana Bogota Real Estate NA

Bancolombia Medellin Services, retail, energy, real estate NA

Correval Bogota Real Estate, infrastructure & financial NA

Private Equity

Success Stories

• Tribeca acquired Onda De Mar (high end bathing suit company) in early 2006, its growth for that year was 35% over 2005.

• Estrategias Corporativas closed its first REIT already, and is raising money for a second one.

• LAEFM;Colombian Hydrocarbons Fund (US$ 62 million) Invests in exploration and production of minor fields in Colombia. The fund started operations in 2005 and already has two oil discoveries. Its main investors are local pension funds, ECOPETROL and local oil companies.

• Colombia’s Financial Market

• Private Equity in Colombia

• Value Proposition for Colombia´s Financial Market

• Frequently asked questions & answers

• Incentives & Services to investors

Colombia´s strong economic performance, improving regulatory framework and the development of the private equity industry

make the country an attractive destination for investors wanting to invest in the financial sector in LATAM

Human ResourcesOne of the most qualified labor pools in LATAM: more than 21.000 business related university graduates per year

Regulatory Framework No restrictions to invest in the sector and new regulations allowing pension funds to invest in private equity funds will help develop the industry in the country

Emerging marketGDP growth of 7.7%, an increase in assets of 15.8% coupled with a banking penetration level of 55% give newcomers great opportunities to conquer the remaining share of these industries

Private Equity Colombia offers a diversified list of sectors in which these funds can invest their capital, public and private entities are helping educate companies on the benefits on financing with Private Equity

Financial Sector Value Proposition

• Colombia’s Financial Market

• Private Equity in Colombia

• Value Proposition for Colombia´s Financial Market

• Frequently asked questions & answers

• Incentives & Services to investors

Frequently asked questions & answers

What are the minimum capital requirements to set upa financial entity in Colombia?

Financial Establishments

Minimum Capital COP$ for 2008

Minimum Capital in US$ for 2008 (Exchange rate COP$ 2000 per Dollar)

Banking Establishments 62.748.000.000 31.374.000

Financial Corporations 22.820.000.000 11.410.000

Commercial Financial Companies 16.165.000.000 8.082.500

Fiduciary Companies 4.760.000.000 2.380.000

Pension Funds Administration Societies 9.510.000.000 4.755.000

Severance Payment Funds Administration Societies 4.760.000.000 2.380.000

Pension and Severance Payment Funds Administration Societies 14.265.000.000 7.132.500

Other Financial Establishments 3.807.000.000 1.903.500

Exchange Offices 5.708.000.000 2.854.000

Frequently asked questions & answers

What are the minimum capital requirements to set upan insurance company or like entity in Colombia?

Insurance

Minimum Capital COP$ for 2008 Minimum Capital in US$ for 2008

(Exchange rate COP$ 2000 per Dollar)

Insurance Company 7.157.000.000 3.578.500

Re-insurance Companies 28.619.000.000 14.309.500

Capitalization 3.807.000.000 1.903.500

Credits to Export Companies 6.378.000.000 3.189.000

Frequently asked questions & answers

• Is there a maximum legal percent of foreign ownershio for a bank in colombia?

» There are no restrictions on foreign ownership for financial entities

• What has been Colombia´s GDP per capita?

Source: EIU

• Colombia’s Financial Market

• Private Equity in Colombia

• Value Proposition for Colombia´s Financial Market

• Frequently asked questions & answers

• Incentives & Services to investors

Investments over USD 1,900.000Investor must pay a premium to the Government equivalent to 1% of theinvestment made.

* These contracts exclude rules regarding the social security system, the obligation to report and pay taxes levied by the government under a state of emergency, indirect taxes (i.e., the VAT or the tax on banking transactions), prudential regulations of the financial system and the utility rate system.

Period

Admission Technical reportEvaluation and

approval of the application

Final evaluation

Objective Guaranteeing the legislation and administrative interpretation considered as adetermining factor for the investment project.

Conditions

From 3 to 20 years maximum.

Investors can subscribe Legal Stability Contracts with the Colombian Government

Business Environment:Attractive investment incentives

Deductions include among others the following:

40% of the amount invested in productive real assets acquired.

100% of the amount paid for Industry & Commerce, sign and billboard, and property taxes during the corresponding taxable year, as long as they are directly related to the taxpayer’s economic activity.

25% of the tax paid on financial transactions may be deducted, regardless of their relationship to the taxpayer’s economic activity.

125% of investment made within taxable period incase of investment is made in scientific projects, technology, innovation and professional training.

Deductible expenses in corporate taxes

•Working capital.

• Investment in fixed or deferred assets

•Substitution of debts (except liabilities with partners)

•Total or partial purchase of companies related to the foreign trade sector.

•Including creation of new companies, acquisition of shares or equity quotas.

Amount: Up to 100% of the investment, always provided if the amount requested does not exceed the total amount of exports and / or projected imports or invoicing during the credit term.

Duff & Phelps: AAA.Standard & Poor’s BB+/stable

Financial support for investors

Bancoldex as Colombia’s EXIM Bank provides development multi-bank integral solutions.

Tailor made information request

Contacts with public and private sectors

Set up of agendas when investors decide to visit to Colombia

Aftercare services for investors that are already established in the country

Assessment and improvement of business climate

Proexport: Investment Promotion Agency offers world class services to

foreign investors

Proxeport’s overseas offices