**Table 10: Size and Ownership of Five Largest Collective Investment Scheme Providers (December 2005)**

||**Collective Investments under**<br>**Management(Col$ billion)**|**Market Share**|**Ownership**|
|---|---|---|---|
|Fiducolombia|2,980|17%|Grupo Sindicato|
|Suvalor|1,640|9%|Grupo Sindicato|
|Fiduciaria Davivienda|1,601|9%|Grupo Bolivar|
|Fiduvalle|1,170|7%|Grupo Aval|
|Fiduciaria Bogota|1,090|6%|Grupo Aval|

_Source: Superintendencia Financiera, own analysis. Note: Collective investments include FCO, FCE, FPVs (only those managed by fiduciarias), FV and FI. Fondos mutuos vigilados are excluded._

# **_D. Specific Reform 3: Fiduciary Activities_**

**Recommendation: Allow banks to offer services currently provided by fiduciarias, with the exception of collective investment schemes** . Law 45/1923 had permitted the provision of trust activities directly by banks, but it was not until Law 45/1990, which obliged the creation of stand-alone companies (fiduciarias), that this type of activity grew in importance. Fiduciarias are essentially responsible for managing/administering third party trusts/funds (“ _fideicomisos_ ”)<sup>30</sup> that can be established for several reasons<sup>31</sup> . The Superintendencia Financiera classifies fiduciary activities into the following categories: _inversión_ (FCO, FCE etc.), _inmobiliaria_ (payments and collections for construction projects etc.), _administración_ (payments and collections for other trusts such as those for inheritance, property, securitizations and restructured loans etc.), _seguridad social_ (administration and investments of trusts/funds related to social security, including FPV), and _garantía y otros_ (all others, including fiducia en garantía). The recommendation would allow banks – in addition to fiduciarias – to directly offer such services if they so wish, with the aforementioned exception of management of collective investment schemes<sup>32</sup> .

**Fiduciarias are a relatively rare type of legal vehicle internationally** . Even though the legal concept of a trust/fiduciary contract exists in other countries, fiduciarias have no direct counterparts (including in Chile, Mexico and Spain) and their application and

> 30 There exist three main types of fiduciary contracts in Colombia: _fiducia mercantil_ (transfer of ownership and creation of autonomous trust for funds/goods, which is managed by the fiduciaria on behalf of the beneficiary), _encargo fiduciario_ (the fiduciaria administers the funds/goods on behalf of the owner without any transfer of ownership or creation of autonomous trust) and _fiducia publica_ (similar to _encargo fiduciario_ but involving a public entity).

> 31 These include, for example, collective investments (e.g. FCO, FCE) and other investment funds with “specific destination” (e.g. public pension funds), securitization vehicles (e.g. for securitizations of construction projects, bank loans, or of future cash flows of local/national government), construction / property development / infrastructure projects, restructured corporate and municipal loans (Laws 550/1999 and 617/2000), liquidation of private and public companies, administration of housing subsidies, inheritance and life insurance contracts, and collateral trusts (“fiducia en garantía”).

> 32 There might also be a few other fiduciaria activities that, based on good international practice, should not be provided by the banks – for example, management of securitization special purpose vehicles.

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