## 1.   Priority Recommendations

## Source details

**Canonical URL:** [1.   Priority Recommendations](https://www.imf.org/-/media/files/publications/cr/2022/english/1colea2022001.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2022/english/1colea2022001.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2022/english/1colea2022001.pdf.json)

---

### Summary of mission outcomes and priority recommendations
- STA provided technical assistance (TA) on financial soundness indicators (FSI) to Superintendencia Financiera de Colombia (SFC) during August 30-September 3, 2021; mission conducted remotely via video conferences.
- Mission objectives:
  - (i) review characteristics of financial institutions and ensure proper classification as deposit-takers (DTs) or other financial corporations (OFCs) per the IMF’s 2019 Financial Soundness Indicators Compilation Guide (2019 FSIs Guide);
  - (ii) develop a work program and timeline to revise reported FSIs.
- Current reporting status prior to mission:
  - SFC has been reporting quarterly FSIs for Colombia to STA with data going back to 2005.
  - Colombia reports all core FSIs for DTs and 10 encouraged FSIs as defined in the 2006 FSIs Guide.
  - FSIs for other sectors (OFCs and real-estate) are not yet reported.
- Institutional classification outcome:
  - DTs as agreed during the mission comprise: twenty-five commercial banks, five financial cooperatives, ten financing companies, six financial corporations, and two specialized financial institutions acting as DTs (Banco de Comercio Exterior de Colombia S.A. (BANCOLDEX) and Fondo Nacional de Ahorro (FNA)).
- Reporting recommendations:
  - SFC should start reporting FSI data for DTs as defined and agreed during the mission (Target Date: January 2022).
  - SFC should compile and report revised FSI historical series for DTs going back to 2018, with the coverage defined and agreed during the mission (Target Date: January 2022).
  - SFC should revise the metadata for FSIs institutional coverage (FS1 template) with annual data starting from 2018 (Target Date: January 2022).
- Rationale for change:
  - Previously SFC included nine other specialized financial institutions (e.g., FOGAFIN and FOGACOOP) in DTs reporting; these institutions offer deposit guarantees but do not collect deposits and therefore are not DTs.
  - To ensure comparability over recent years for surveillance and analysis, the mission recommended historical revisions back to 2018.

### Action plan (priorities, milestones, and target completion dates)
- Priority recommendations (PR):
  - The SFC to start reporting to STA FSIs data for DTs as defined and agreed during the mission. — January 2022
  - The SFC to compile and report to STA revised FSIs historical series for DTs going back to 2018, with coverage as defined and agreed during the mission. — January 2022
- High priority (H):
  - The SFC to start reporting FSIs for DTs using new report forms according to the 2019 FSIs Guide. — December 2022
  - The SFC to consider reporting FSIs for OFCs when transitioning to the new report forms according to the 2019 FSIs Guide. — December 2022
- Medium priority (M):
  - The SFC to support its officials to participate in IMF FSI training courses and webinars. — Ongoing
  - The SFC to discuss and decide on the timeframe and TA needs if any to update the methods for compilation and dissemination of FSIs for DTs in line with the 2019 FSIs Guide. — January 2022
- Improved data and metadata accessibility (PR):
  - The SFC to revise the metadata for FSIs institutional coverage (FS1 template) with annual data starting from 2018. — January 2022

### Background and context
- This was the first TA mission on FSIs for Colombia; a prior MFS mission in 2009 assisted Banco de la República with SRFs for the central bank (SRF 1SR), other depository corporations (SRF 2SR), and OFCs (SRF 4SR).
- SFC has been reporting monthly FSIs with an average lag of up to three months; FSIs are disseminated by STA along with metadata and underlying statements.
- The mission focused on addressing discrepancies regarding DT coverage in FSI compilation.

### Overview of Colombia’s financial system (key characteristics)
- Total assets of the financial sector are more than 200 percent of GDP as of end-June 2021.
- The sector consists of the central bank (Banco de la República) and supervised financial institutions including commercial banks, financial corporations, financing companies, financial cooperatives, investment funds, pension funds, insurance corporations, and several other financial intermediaries including electronic deposit institutions.
- Banco de la República responsibilities include: conduct of monetary policy, sustaining economic growth, maintaining financial stability, functioning of the payments system, authority to adopt macroprudential measures, providing liquidity, and acting as lender-of-last-resort.
- The SFC is the primary financial supervisory authority; empowered by the Colombian Financial System Organic Statute-Decree 663 of 1993 (EOSF).

### Sectoral classification for FSIs: DTs and OFCs
- Importance:
  - DTs facilitate placement of funds mostly as deposits and lending and are a central focus of core FSIs.
  - OFCs provide additional insights and constitute a large share of system assets.
- Prior SFC coverage included commercial banks, financial cooperatives, financing companies, financial corporations, and eleven specialized financial institutions (including FOGAFIN and FOGACOOP).
- Mission finding: not all institutions previously included as DTs accept deposits or close substitutes of deposits; proper classification of OFCs is important since they hold close to 60 percent of financial system assets.

### Deposit-takers (DTs) — agreed subsector composition and roles
- Agreed DTs composition (as of mission):
  - twenty-five commercial banks
  - ten financing companies
  - six financial corporations
  - five financial cooperatives
  - two specialized financial institutions acting as DTs: BANCOLDEX and FNA
- Aggregate share:
  - Together they constitute around 32 percent of the entire financial system assets (data as at end December 2020).
- Roles and notes:
  - Commercial banks account for over 90 percent of the DTs and close to 30 percent of the entire financial system in terms of asset share.
  - Financial corporations constitute around one percent of the DTs in terms of asset share; they raise more than half of resources through deposits.
  - Financing companies capture savings through deposits and engage in leasing, loans, factoring, discounting, and foreign currency intermediation.
  - Financial cooperatives are a small fraction of DTs; there are 5 financial cooperatives.
  - BANCOLDEX and FNA each account for less than one percent of the subsector.
    - BANCOLDEX: public financial corporation organized as a bank credit establishment; accepts deposits; a third of its deposits are saving deposits from private and public corporations, the rest are certificates of deposits negotiable on the Colombian stock-exchange; must comply with reserve requirement set by Banco de la República.
    - FNA: state-owned credit establishment; primarily collects severance payments; accepts deposits via a voluntary savings plan (AVC) open to all Colombians of legal age; grants loans for housing and education; FNA accounts for close to 10 percent of the total mortgage loans in the country.
- Distressed institutions:
  - Currently there are no DTs in receivership or liquidation in Colombia.
  - 2019 FSIs Guide recommends including DTs in distress in coverage if they hold significant positions and compiling FSIs both including and excluding such DTs.

### Other Financial Corporations (OFCs)
- OFCs account for close to 60 percent of the total assets of the financial sector.
- Main components: insurance corporations, money market funds (MMFs), non-MMF investment funds, pension funds, and other financial intermediaries including specialized state-owned or mixed-economy enterprises.
- Collective investment funds (MMFs and non-MMFs) constitute the largest OFC subsector; classified by SFC based on administrator: trust companies, brokerage firms, and investment management companies.

### Key statistics (as at end December 2020)
- Total assets (A+B+C): 2,449,249,308.40 (Millions of COP)
- Banco de la Republica (A)
  - Number of Institutions: 1
  - Total assets (Millions of COP): 249,838,795.00
  - Share in Total Assets (percent): 10.20
- Deposit-takers (B)
  - Number of Institutions: 48
  - Total assets (Millions of COP): 788,503,295.40
  - Share in Total Assets (percent): 32.19
  - Commercial banks: 25 institutions; 729,840,954.23 (Millions of COP); 29.80 (percent)
  - Financial corporations: 6 institutions; 22,513,545.86 (Millions of COP); 0.92 (percent)
  - Financing companies: 10 institutions; 12,198,987.55 (Millions of COP); 0.50 (percent)
  - Financial cooperatives: 5 institutions; 4,170,281.76 (Millions of COP); 0.17 (percent)
  - BANCOLDEX: 1 institution; 10,369,051 (Millions of COP); 0.42 (percent)
  - FNA: 1 institution; 9,410,475 (Millions of COP); 0.38 (percent)
- Other Financial Corporations (C)
  - Number of Institutions: 268
  - Total assets (Millions of COP): 1,410,903,672
  - Share in Total Assets (percent): 57.61
  - Insurance corporations: 46 institutions; 93,725,294.32 (Millions of COP); 3.83 (percent)
    - Life insurance corporations: 18 institutions; 58,357,778.59 (Millions of COP)
    - Non-life insurance corporations: 28 institutions; 35,367,515.73 (Millions of COP)
  - Money market funds: 36 institutions; 109,558,159.57 (Millions of COP); 4.47 (percent)
  - Non MMF investment funds: 26 institutions; 677,684,121.64 (Millions of COP); 27.67 (percent)
  - Pension funds: 18 institutions; 360,475,160.74 (Millions of COP); 14.72 (percent)
  - Other financial Intermediaries (1/): 9 institutions; 68,340,682.84 (Millions of COP); 2.79 (percent)
  - Others (2/): 133 institutions; 101,120,253.02 (Millions of COP); 4.13 (percent)

### Pension funds and severance funds
- The pension funds subsector constitutes close to 15 percent of the OFCs sector’s assets (Table 2).
- The pension funds also include severance funds which provide retirement benefits to specific groups of people.
- Table 3 figures:
  - Pension Funds’ assets to total financial assets: Percentage 16.4%
  - Pension Funds’ assets: Millions, COP 360,475,160.74
  - OFCs' assets to gross domestic product: OFCs' assets to gross domestic product: Pension Funds Percentage 35.95%
  - Pension Funds’ assets (OFCs to GDP row): Millions, COP 360,475,160.00

### Other financial intermediaries (specialized financial institutions)
- Nine specialized financial institutions constitute close to 5 percent of the total assets of OFCs.
- These institutions are established under different provisions of the EOSF which defines their legal nature, purpose, and authorized operations.
- They mainly provide rediscounting operations to financial institutions in Colombia and operate like development banks, albeit they do not accept deposits.

### Insurance corporations
- The insurance corporations’ subsector in Colombia is relatively small with less than five percent of the total assets of the OFCs sector.
- There are 46 insurance companies operating in the country:
  - 28 non-life (general) insurance companies
  - 18 life insurance companies
- These entities can be constituted as commercial stock companies or cooperative associations; their corporate purpose is to carry out insurance operations.
- There are currently no reinsurance companies incorporated in Colombia.
- Table 3 figures:
  - Insurance Corporations’ assets to total financial assets: Percentage 4.3%
  - Insurance Corporations’ assets: Millions, COP 93,725,294.32
  - OFCs' assets to gross domestic product: Insurance Corporations Percentage 9.35%
  - Insurance Corporations’ assets (OFCs to GDP row): Millions, COP 93,725,294.32

### Specialized electronic deposit institutions (SEDPEs)
- There are five SEDPEs which are not classified as DTs.
- SEDPES can open electronic deposit accounts, offer cash-in and cash-out operations, remittances, etc., but are not allowed to offer credit.
- SEDPES must deposit all customer funds with Banco de la República or the commercial banks.
- Because there is no credit risk, SEDPES are not subject to the full range of prudential requirements that apply to commercial banks and other DTs.
- For FSI compilation, SEDPES are classified as “others” in the OFCs sector rather than DTs.

### FSIs for DTs: Institutional coverage and compilation framework
- Current institutional coverage for FSIs for DTs should be revised based on the sectoral classification developed and agreed during the mission.
- The SFC has primary responsibility for compiling and reporting FSIs to STA and should start compiling FSIs for DTs covering:
  - commercial banks, financing companies, financial corporations, financial cooperatives, and the two specialized deposit taking financial institutions, namely BANCOLDEX and FNA.
- Recommendations:
  - The SFC to start reporting to STA FSIs data for DTs as defined and agreed during the mission, by January 2022.
  - The SFC to compile and report to STA revised FSIs historical series for DTs going back to 2018, with coverage as defined and agreed during the mission, by January 2022.

### Consolidation basis and methodology
- FSIs data for Colombia are currently compiled using domestic location consolidation basis (DL).
- The 2019 FSIs Guide recommends cross-border, cross-sector, domestically incorporated (CBCSDI) method of consolidation when compiling FSIs for DTs.
- The 2019 FSIs Guide recognizes DL as an option for countries with DTs that have:
  - (i) very few or no foreign branches or subsidiaries, and
  - (ii) very few or no cross-sector subsidiaries.
- Recommendation:
  - The SFC to discuss and decide on the timeframe and TA needs if any to update the methods for compilation and disseminations of FSIs for DTs in line with the guidance provided in the 2019 FSIs Guide.

### FSIs metadata
- Metadata are key for interpreting FSIs and to allow for cross-country comparisons; metadata should contain institutional coverage, accounting conventions, and other national guidelines.
- Metadata should be updated when changes are observed.
- Recommendation:
  - The SFC to revise the metadata for FSIs institutional coverage (FS1 template) with annual data starting from 2018, by January 2022.

### New FSI report forms and migration
- STA is implementing migration of FSI data collection based on the 2019 FSIs Guide, which includes new indicators expanding coverage to other financial intermediaries, money market funds, insurance corporations, and pension funds.
- The 2019 FSIs Guide introduces new FSIs for DTs, nonfinancial corporations, and households, including new capital, liquidity and asset quality metrics, and concentration and distribution measures.
- Current reporting forms will be decommissioned by December 2022.
- The SFC will prioritize revising compilation of FSIs with the institutional coverage for DTs defined during the mission, then focus on reporting FSIs data to STA in new report forms.
- Recommendation:
  - The SFC to start reporting FSIs for DTs using new report forms according to the FSIs Guide 2019, by December 2022.

### FSIs for OFCs and compilation of OFC indicators
- The FSIs for OFCs (OFCs financial assets to total financial assets and OFCs financial assets to GDP) were compiled during the mission (Table 3).
- The OFCs subsector represents a significant share of the financial system.
- The mission advised that the SFC should consider reporting FSIs pertaining to OFCs as the country transitions to new FSI reporting forms.
- Recommendation:
  - The SFC to consider reporting FSIs for OFCs when transitioning to new report forms according to the 2019 FSIs Guide, by December 2022.

### Key statistics from Table 3 (Financial Soundness Indicators for Other Financial Corporations)
- Total OFCs' assets to total financial assets: Percentage 64.1%
- Total OFCs’ assets: Millions of COP 1,410,903,672
- Money Market funds' assets to total financial assets: Percentage 5.0%
- Money market funds’ assets: Millions, COP 109,558,159.57
- Total financial system assets: Millions, COP 2,199,406,967.53
- OFCs' assets to gross domestic product: OFCs' assets to gross domestic product Percentage 140.73%
- Gross domestic product: Millions, COP 1,002,587,190.00
- OFCs' assets to gross domestic product: Money Market funds Percentage 10.93%
- Money market funds’ assets (OFCs to GDP row): Millions, COP 109,558,159.57
- OFCs' assets to gross domestic product: Insurance Corporations Percentage 9.35%
- Insurance Corporations’ assets (OFCs to GDP row): Millions, COP 93,725,294.32

### Resources, training and technical cooperation
- The mission recommended SFC staff attend regional and IMF HQ training courses on financial sector statistics.
- STA regularly delivers courses on both MFS and FSIs at IMF HQ and regional trainings; STA also delivers regional webinars.
- Recommendation:
  - The SFC to support its officials to participate in IMF FSI training courses and webinars to improve methodological knowledge and skills in compilation and interpretation of FSIs.

### Other findings: alternative FSI set focused on credit establishments
- The SFC produces and disseminates another set of FSIs on its website focused on institutions which offer credit primarily in the form of loans to households and nonfinancial corporations.
- The FSIs reported to STA follow the core and encouraged FSIs for DTs as prescribed in the 2006 FSIs Guide; the SFC’s published set focuses on credit institutions, leading to possible differences.
- For local purposes, coverage for credit institutions is limited to commercial banks, financial cooperatives, finance companies, and financial corporations.
- For asset quality indicators like nonperforming loans to total gross loans, the SFC includes the Fondo National Del Ahorro (FNA), a state-owned specialized entity and major provider of mortgage loans.
- Table 4 institutional coverage summary distinctions:
  - FSIs reported to STA previously: Commercial banks, financial cooperatives, financing companies, financial corporations, and specialized financial institutions.1/
  - FSIs to be reported to STA after the mission: Commercial banks, financial cooperatives, financing companies, financial corporations, and two specialized financial institutions BANCOLDEX and FNA.
  - FSIs published by the SFC: Commercial banks, financial cooperatives, financing companies, financial corporations and FNA.2/
  - Notes in Table 4:
    - 1/ BANCOLDEX, FINDETER, FDN, FOGAFIN, FINAGRO, FINDETER, FONDO NACIONAL DEL AHORRO, FOGACOOP, FNG, CAJA DE VIVENDA MILITAR.
    - 2/ FNA is included only for the credit indicators.

### Appendix IV — Summaries of specialized financial institutions
- FINAGRO: publicly owned credit institution to promote agricultural and rural development; provides resources to financial intermediaries to provide loans to farmers and the agricultural sector.
- FINDETER: organized as a credit institution; promotes regional and urban development through financing and advising regarding the design, execution and administration of investment projects or programs.
- FDN: public financial institution that specializes in infrastructure project finance and structuring.
- ICETEX: public financial institution that promotes higher education through educational credits; SFC does not supervise its credit activity, only oversees operations related to the Educational Savings Securities (TAEs).
- FOGAFIN: public financial institution mandated to protect depositor and creditor confidence in registered financial institutions; objectives include strengthening equity of registered institutions, temporary capital positions, liquidity of financial and foreclosed assets, organizing and developing a deposit insurance system, purchase of long-term debt of registered institutions in liquidation, and monitoring liquidators.
- FOGACOOP: financial entity under the Ministry of Treasury and Public Credit; administers deposit insurance funds for financial cooperative activities and can participate temporarily in registered cooperative members’ assets.
- FNG: mixed economy enterprise that facilitates access to financing by providing guarantees and acting as guarantor for credit operations.
- Caja Promotora de Vivienda Militar y de Policía: public corporation organized as a credit institution to facilitate housing acquisition for members, manage savings, develop administrative/financial/credit activities, and manage severance payments of the military forces and the national police.
- ENTERRITORIO: state industrial and commercial company of a financial nature, linked to the National Planning Department; acts as an agent in the development project cycle through financing and management of studies, and coordination and financing of projects.

*Source: 1colea2022001 - 1.   Priority Recommendations, IMF technical assistance mission report.*

### 1.   Priority Recommendations ____________________________________________________________________ 5

### 1.   Priority Recommendations

### Summary of mission outcomes and priority recommendations
- STA provided technical assistance (TA) on financial soundness indicators (FSI) to Superintendencia Financiera de Colombia (SFC) during August 30-September 3, 2021; mission conducted remotely via video conferences.
- Mission objectives:
  - (i) review characteristics of financial institutions and ensure proper classification as deposit-takers (DTs) or other financial corporations (OFCs) per the IMF’s 2019 Financial Soundness Indicators Compilation Guide (2019 FSIs Guide);
  - (ii) develop a work program and timeline to revise reported FSIs.
- Current reporting status prior to mission:
  - SFC has been reporting quarterly FSIs for Colombia to STA with data going back to 2005.
  - Colombia reports all core FSIs for DTs and 10 encouraged FSIs as defined in the 2006 FSIs Guide.
  - FSIs for other sectors (OFCs and real-estate) are not yet reported.
- Institutional classification outcome:
  - DTs as agreed during the mission comprise: twenty-five commercial banks, five financial cooperatives, ten financing companies, six financial corporations, and two specialized financial institutions acting as DTs (Banco de Comercio Exterior de Colombia S.A. (BANCOLDEX) and Fondo Nacional de Ahorro (FNA)).
- Reporting recommendations:
  - SFC should start reporting FSI data for DTs as defined and agreed during the mission (Target Date: January 2022).
  - SFC should compile and report revised FSI historical series for DTs going back to 2018, with the coverage defined and agreed during the mission (Target Date: January 2022).
  - SFC should revise the metadata for FSIs institutional coverage (FS1 template) with annual data starting from 2018 (Target Date: January 2022).
- Rationale for change:
  - Previously SFC included nine other specialized financial institutions (e.g., FOGAFIN and FOGACOOP) in DTs reporting; these institutions offer deposit guarantees but do not collect deposits and therefore are not DTs.
  - To ensure comparability over recent years for surveillance and analysis, the mission recommended historical revisions back to 2018.

### Action plan (priorities, milestones, and target completion dates)
- Priority recommendations (PR):
  - The SFC to start reporting to STA FSIs data for DTs as defined and agreed during the mission. — January 2022
  - The SFC to compile and report to STA revised FSIs historical series for DTs going back to 2018, with coverage as defined and agreed during the mission. — January 2022
- High priority (H):
  - The SFC to start reporting FSIs for DTs using new report forms according to the 2019 FSIs Guide. — December 2022
  - The SFC to consider reporting FSIs for OFCs when transitioning to the new report forms according to the 2019 FSIs Guide. — December 2022
- Medium priority (M):
  - The SFC to support its officials to participate in IMF FSI training courses and webinars. — Ongoing
  - The SFC to discuss and decide on the timeframe and TA needs if any to update the methods for compilation and dissemination of FSIs for DTs in line with the 2019 FSIs Guide. — January 2022
- Improved data and metadata accessibility (PR):
  - The SFC to revise the metadata for FSIs institutional coverage (FS1 template) with annual data starting from 2018. — January 2022

### Background and context
- This was the first TA mission on FSIs for Colombia; a prior MFS mission in 2009 assisted Banco de la República with SRFs for the central bank (SRF 1SR), other depository corporations (SRF 2SR), and OFCs (SRF 4SR).
- SFC has been reporting monthly FSIs with an average lag of up to three months; FSIs are disseminated by STA along with metadata and underlying statements.
- The mission focused on addressing discrepancies regarding DT coverage in FSI compilation.

### Overview of Colombia’s financial system (key characteristics)
- Total assets of the financial sector are more than 200 percent of GDP as of end-June 2021.
- The sector consists of the central bank (Banco de la República) and supervised financial institutions including commercial banks, financial corporations, financing companies, financial cooperatives, investment funds, pension funds, insurance corporations, and several other financial intermediaries including electronic deposit institutions.
- Banco de la República responsibilities include: conduct of monetary policy, sustaining economic growth, maintaining financial stability, functioning of the payments system, authority to adopt macroprudential measures, providing liquidity, and acting as lender-of-last-resort.
- The SFC is the primary financial supervisory authority; empowered by the Colombian Financial System Organic Statute-Decree 663 of 1993 (EOSF).

### Sectoral classification for FSIs: DTs and OFCs
- Importance:
  - DTs facilitate placement of funds mostly as deposits and lending and are a central focus of core FSIs.
  - OFCs provide additional insights and constitute a large share of system assets.
- Prior SFC coverage included commercial banks, financial cooperatives, financing companies, financial corporations, and eleven specialized financial institutions (including FOGAFIN and FOGACOOP).
- Mission finding: not all institutions previously included as DTs accept deposits or close substitutes of deposits; proper classification of OFCs is important since they hold close to 60 percent of financial system assets.

### Deposit-takers (DTs) — agreed subsector composition and roles
- Agreed DTs composition (as of mission):
  - twenty-five commercial banks
  - ten financing companies
  - six financial corporations
  - five financial cooperatives
  - two specialized financial institutions acting as DTs: BANCOLDEX and FNA
- Aggregate share:
  - Together they constitute around 32 percent of the entire financial system assets (data as at end December 2020).
- Roles and notes:
  - Commercial banks account for over 90 percent of the DTs and close to 30 percent of the entire financial system in terms of asset share.
  - Financial corporations constitute around one percent of the DTs in terms of asset share; they raise more than half of resources through deposits.
  - Financing companies capture savings through deposits and engage in leasing, loans, factoring, discounting, and foreign currency intermediation.
  - Financial cooperatives are a small fraction of DTs; there are 5 financial cooperatives.
  - BANCOLDEX and FNA each account for less than one percent of the subsector.
    - BANCOLDEX: public financial corporation organized as a bank credit establishment; accepts deposits; a third of its deposits are saving deposits from private and public corporations, the rest are certificates of deposits negotiable on the Colombian stock-exchange; must comply with reserve requirement set by Banco de la República.
    - FNA: state-owned credit establishment; primarily collects severance payments; accepts deposits via a voluntary savings plan (AVC) open to all Colombians of legal age; grants loans for housing and education; FNA accounts for close to 10 percent of the total mortgage loans in the country.
- Distressed institutions:
  - Currently there are no DTs in receivership or liquidation in Colombia.
  - 2019 FSIs Guide recommends including DTs in distress in coverage if they hold significant positions and compiling FSIs both including and excluding such DTs.

### Other Financial Corporations (OFCs)
- OFCs account for close to 60 percent of the total assets of the financial sector.
- Main components: insurance corporations, money market funds (MMFs), non-MMF investment funds, pension funds, and other financial intermediaries including specialized state-owned or mixed-economy enterprises.
- Collective investment funds (MMFs and non-MMFs) constitute the largest OFC subsector; classified by SFC based on administrator: trust companies, brokerage firms, and investment management companies.

### Key statistics (as at end December 2020)
- Total assets (A+B+C): 2,449,249,308.40 (Millions of COP)
- Banco de la Republica (A)
  - Number of Institutions: 1
  - Total assets (Millions of COP): 249,838,795.00
  - Share in Total Assets (percent): 10.20
- Deposit-takers (B)
  - Number of Institutions: 48
  - Total assets (Millions of COP): 788,503,295.40
  - Share in Total Assets (percent): 32.19
  - Commercial banks: 25 institutions; 729,840,954.23 (Millions of COP); 29.80 (percent)
  - Financial corporations: 6 institutions; 22,513,545.86 (Millions of COP); 0.92 (percent)
  - Financing companies: 10 institutions; 12,198,987.55 (Millions of COP); 0.50 (percent)
  - Financial cooperatives: 5 institutions; 4,170,281.76 (Millions of COP); 0.17 (percent)
  - BANCOLDEX: 1 institution; 10,369,051 (Millions of COP); 0.42 (percent)
  - FNA: 1 institution; 9,410,475 (Millions of COP); 0.38 (percent)
- Other Financial Corporations (C)
  - Number of Institutions: 268
  - Total assets (Millions of COP): 1,410,903,672
  - Share in Total Assets (percent): 57.61
  - Insurance corporations: 46 institutions; 93,725,294.32 (Millions of COP); 3.83 (percent)
    - Life insurance corporations: 18 institutions; 58,357,778.59 (Millions of COP)
    - Non-life insurance corporations: 28 institutions; 35,367,515.73 (Millions of COP)
  - Money market funds: 36 institutions; 109,558,159.57 (Millions of COP); 4.47 (percent)
  - Non MMF investment funds: 26 institutions; 677,684,121.64 (Millions of COP); 27.67 (percent)
  - Pension funds: 18 institutions; 360,475,160.74 (Millions of COP); 14.72 (percent)
  - Other financial Intermediaries (1/): 9 institutions; 68,340,682.84 (Millions of COP); 2.79 (percent)
  - Others (2/): 133 institutions; 101,120,253.02 (Millions of COP); 4.13 (percent)

*Source: 1colea2022001 - 1.   Priority Recommendations, IMF technical assistance mission report.*

### 25. The pension funds subsector is significant, constituting close to 15 percent of the

### 25. The pension funds subsector is significant, constituting close to 15 percent of the

### Pension funds and severance funds
- The pension funds subsector constitutes close to 15 percent of the OFCs sector’s assets (Table 2).
- The pension funds also include severance funds which provide retirement benefits to specific groups of people.
- Table 3 figures:
  - Pension Funds’ assets to total financial assets: Percentage 16.4%
  - Pension Funds’ assets: Millions, COP 360,475,160.74
  - OFCs' assets to gross domestic product: OFCs' assets to gross domestic product: Pension Funds Percentage 35.95%
  - Pension Funds’ assets (OFCs to GDP row): Millions, COP 360,475,160.00

### Other financial intermediaries (specialized financial institutions)
- Nine specialized financial institutions constitute close to 5 percent of the total assets of OFCs.
- These institutions are established under different provisions of the EOSF which defines their legal nature, purpose, and authorized operations.
- They mainly provide rediscounting operations to financial institutions in Colombia and operate like development banks, albeit they do not accept deposits.
- A summary of each of the nine specialized financial institutions is included as Appendix IV.

### Insurance corporations
- The insurance corporations’ subsector in Colombia is relatively small with less than five percent of the total assets of the OFCs sector.
- There are 46 insurance companies operating in the country:
  - 28 non-life (general) insurance companies
  - 18 life insurance companies
- These entities can be constituted as commercial stock companies or cooperative associations; their corporate purpose is to carry out insurance operations.
- There are currently no reinsurance companies incorporated in Colombia.
- Table 3 figures:
  - Insurance Corporations’ assets to total financial assets: Percentage 4.3%
  - Insurance Corporations’ assets: Millions, COP 93,725,294.32
  - OFCs' assets to gross domestic product: Insurance Corporations Percentage 9.35%
  - Insurance Corporations’ assets (OFCs to GDP row): Millions, COP 93,725,294.32

### Specialized electronic deposit institutions (SEDPEs)
- There are five SEDPEs which are not classified as DTs.
- SEDPES can open electronic deposit accounts, offer cash-in and cash-out operations, remittances, etc., but are not allowed to offer credit.
- SEDPES must deposit all customer funds with Banco de la República or the commercial banks.
- Because there is no credit risk, SEDPES are not subject to the full range of prudential requirements that apply to commercial banks and other DTs.
- For FSI compilation, SEDPES are classified as “others” in the OFCs sector rather than DTs.

### FSIs for DTs: Institutional coverage and compilation framework
- Current institutional coverage for FSIs for DTs should be revised based on the sectoral classification developed and agreed during the mission.
- The SFC has primary responsibility for compiling and reporting FSIs to STA and should start compiling FSIs for DTs covering:
  - commercial banks, financing companies, financial corporations, financial cooperatives, and the two specialized deposit taking financial institutions, namely BANCOLDEX and FNA.
- Recommendations:
  - The SFC to start reporting to STA FSIs data for DTs as defined and agreed during the mission, by January 2022.
  - The SFC to compile and report to STA revised FSIs historical series for DTs going back to 2018, with coverage as defined and agreed during the mission, by January 2022.

### Consolidation basis and methodology
- FSIs data for Colombia are currently compiled using domestic location consolidation basis (DL).
- The 2019 FSIs Guide recommends cross-border, cross-sector, domestically incorporated (CBCSDI) method of consolidation when compiling FSIs for DTs.
- The 2019 FSIs Guide recognizes DL as an option for countries with DTs that have:
  - (i) very few or no foreign branches or subsidiaries, and
  - (ii) very few or no cross-sector subsidiaries.
- Recommendation:
  - The SFC to discuss and decide on the timeframe and TA needs if any to update the methods for compilation and disseminations of FSIs for DTs in line with the guidance provided in the 2019 FSIs Guide.

### FSIs metadata
- Metadata are key for interpreting FSIs and to allow for cross-country comparisons; metadata should contain institutional coverage, accounting conventions, and other national guidelines.
- Metadata should be updated when changes are observed.
- Recommendation:
  - The SFC to revise the metadata for FSIs institutional coverage (FS1 template) with annual data starting from 2018, by January 2022.

### New FSI report forms and migration
- STA is implementing migration of FSI data collection based on the 2019 FSIs Guide, which includes new indicators expanding coverage to other financial intermediaries, money market funds, insurance corporations, and pension funds.
- The 2019 FSIs Guide introduces new FSIs for DTs, nonfinancial corporations, and households, including new capital, liquidity and asset quality metrics, and concentration and distribution measures.
- Current reporting forms will be decommissioned by December 2022.
- The SFC will prioritize revising compilation of FSIs with the institutional coverage for DTs defined during the mission, then focus on reporting FSIs data to STA in new report forms.
- Recommendation:
  - The SFC to start reporting FSIs for DTs using new report forms according to the FSIs Guide 2019, by December 2022.

### FSIs for OFCs and compilation of OFC indicators
- The FSIs for OFCs (OFCs financial assets to total financial assets and OFCs financial assets to GDP) were compiled during the mission (Table 3).
- The OFCs subsector represents a significant share of the financial system.
- The mission advised that the SFC should consider reporting FSIs pertaining to OFCs as the country transitions to new FSI reporting forms.
- Recommendation:
  - The SFC to consider reporting FSIs for OFCs when transitioning to new report forms according to the 2019 FSIs Guide, by December 2022.

### Key statistics from Table 3 (Financial Soundness Indicators for Other Financial Corporations)
- Total OFCs' assets to total financial assets: Percentage 64.1%
- Total OFCs’ assets: Millions of COP 1,410,903,672
- Money Market funds' assets to total financial assets: Percentage 5.0%
- Money market funds’ assets: Millions, COP 109,558,159.57
- Total financial system assets: Millions, COP 2,199,406,967.53
- OFCs' assets to gross domestic product: OFCs' assets to gross domestic product Percentage 140.73%
- Gross domestic product: Millions, COP 1,002,587,190.00
- OFCs' assets to gross domestic product: Money Market funds Percentage 10.93%
- Money market funds’ assets (OFCs to GDP row): Millions, COP 109,558,159.57
- OFCs' assets to gross domestic product: Insurance Corporations Percentage 9.35%
- Insurance Corporations’ assets (OFCs to GDP row): Millions, COP 93,725,294.32

### Resources, training and technical cooperation
- The mission recommended SFC staff attend regional and IMF HQ training courses on financial sector statistics.
- STA regularly delivers courses on both MFS and FSIs at IMF HQ and regional trainings; STA also delivers regional webinars.
- Recommendation:
  - The SFC to support its officials to participate in IMF FSI training courses and webinars to improve methodological knowledge and skills in compilation and interpretation of FSIs.

### Other findings: alternative FSI set focused on credit establishments
- The SFC produces and disseminates another set of FSIs on its website focused on institutions which offer credit primarily in the form of loans to households and nonfinancial corporations.
- The FSIs reported to STA follow the core and encouraged FSIs for DTs as prescribed in the 2006 FSIs Guide; the SFC’s published set focuses on credit institutions, leading to possible differences.
- For local purposes, coverage for credit institutions is limited to commercial banks, financial cooperatives, finance companies, and financial corporations.
- For asset quality indicators like nonperforming loans to total gross loans, the SFC includes the Fondo National Del Ahorro (FNA), a state-owned specialized entity and major provider of mortgage loans.
- Table 4 institutional coverage summary distinctions:
  - FSIs reported to STA previously: Commercial banks, financial cooperatives, financing companies, financial corporations, and specialized financial institutions.1/
  - FSIs to be reported to STA after the mission: Commercial banks, financial cooperatives, financing companies, financial corporations, and two specialized financial institutions BANCOLDEX and FNA.
  - FSIs published by the SFC: Commercial banks, financial cooperatives, financing companies, financial corporations and FNA.2/
  - Notes in Table 4:
    - 1/ BANCOLDEX, FINDETER, FDN, FOGAFIN, FINAGRO, FINDETER, FONDO NACIONAL DEL AHORRO, FOGACOOP, FNG, CAJA DE VIVENDA MILITAR.
    - 2/ FNA is included only for the credit indicators.

### Appendix IV — Summaries of specialized financial institutions (as listed)
- FINAGRO: publicly owned credit institution to promote agricultural and rural development; provides resources to financial intermediaries to provide loans to farmers and the agricultural sector.
- FINDETER: organized as a credit institution; promotes regional and urban development through financing and advising regarding the design, execution and administration of investment projects or programs.
- FDN: public financial institution that specializes in infrastructure project finance and structuring.
- ICETEX: public financial institution that promotes higher education through educational credits; SFC does not supervise its credit activity, only oversees operations related to the Educational Savings Securities (TAEs).
- FOGAFIN: public financial institution mandated to protect depositor and creditor confidence in registered financial institutions; objectives include strengthening equity of registered institutions, temporary capital positions, liquidity of financial and foreclosed assets, organizing and developing a deposit insurance system, purchase of long-term debt of registered institutions in liquidation, and monitoring liquidators.
- FOGACOOP: financial entity under the Ministry of Treasury and Public Credit; administers deposit insurance funds for financial cooperative activities and can participate temporarily in registered cooperative members’ assets.
- FNG: mixed economy enterprise that facilitates access to financing by providing guarantees and acting as guarantor for credit operations.
- Caja Promotora de Vivienda Militar y de Policía: public corporation organized as a credit institution to facilitate housing acquisition for members, manage savings, develop administrative/financial/credit activities, and manage severance payments of the military forces and the national police.
- ENTERRITORIO: state industrial and commercial company of a financial nature, linked to the National Planning Department; acts as an agent in the development project cycle through financing and management of studies, and coordination and financing of projects.

*Source: SFC, World Economic Outlook (WEO), and IMF staff calculations.*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1colea2022001.pdf_