Merger of Banco BHD and Banco León Solidifies Second-Largest Bank in Dominican Republic

Centro Financiero BHD, S.A., owner of over 98% of the equity in Banco BHD, S.A. and owner of certain other financial entities in the Dominican Republic, announced that the principal shareholders of Grupo Financiero León, owners of the majority of the equity in Banco León, S.A. and owners of certain other assets, have agreed to contribute such shareholder’s equity stakes in the León family of financial companies to Centro Financiero BHD, S.A. As a result, among other transactions, Banco BHD, S.A. and Banco León, S.A. would merge to form Banco BHD-León, S.A. The contribution agreement (and certain related agreements) were signed effective as of December 4, 2013, and the transaction was publicly announced on the same day.

Banco BHD, S.A. is currently the second largest privately-held bank in the Dominican Republic, and Banco León, S.A, is currently the fourth largest privately-held bank in the Dominican Republic. The merger of these two financial institutions is intended to solidify Banco BHD, S.A.’s (to be renamed Banco BHD-León, S.A.) position as the second largest privately-held bank in the Dominican Republic.            The combined bank will have assets of over US$4.33 billion and will be the fifth-largest bank in the Central American region.

The transaction is subject to certain regulatory approvals, but pre-clearance for the transaction has already been granted by the Monetary Board of the Dominican Republic. The transaction is expected to close in early 2014. The transaction was primarily documented under Dominican law, with Dominican counsel taking the lead in the drafting and negotiation of such documentation. Several New York firms advised and assisted on a number of issues related to the core transaction documentation, and also participated in the drafting and negotiation of one transaction agreement that was documented under New York law.

“This transaction forms part of the development of the Dominican legal and financial markets, and we are very proud to have been able to participate in the same,” commented Partner Francisco Alvarez.

According to Partner Jaime Senior, “having joined the Firm this year after working at Sidley Austin in New York, it was extremely rewarding to work with some of my former colleagues and to participate in a transaction where the legal documentation is as sophisticated as that of any other world-class international transaction.”

“Working on this transaction was tremendously fulfilling, but also enormously challenging for our Firm,” commented Partner Hipólito García. “For example, during the due diligence process, our Firm had a team of sixteen attorneys simultaneously working on the matter.”

Counsel to Centro Financiero BHD:

Lead External Counsel – Headrick Rizik Alvarez & Fernández, Santo Domingo. Partners Francisco Alvarez, Jaime Senior and Hipólito García, and Senior Associate Eileen Jiménez.

Lead Internal Counsel – Shirley Acosta and Carlos Martínez.

Special New York Counsel – Simpson Thacher & Bartlett LLP, New York. Partner Jaime Mercado.

Counsel to Grupo Financiero León:

Squire Sanders & Dempsey Peña-Prieto Gamundi,  Santo Domingo.

Sidley Austin LLP, New York.

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