On Friday, MoneyGram International, Inc. (MGI) announced of its alliance with three new agents in South America, adding 1,103 locations to the company’s network. The expansion has increased its total locations significantly to 11,305 from 10,200 in the region.
The first agent is Bancolombia, a well known brand, which handles more than 25% of the remittances in Colombia. With about 790 locations, it will be MoneyGram’s largest agent in the country. Besides, according to the World Bank, Columbia received about $3.9 billion in remittances in 2010, primarily from the US, Spain, Italy, Venezuela, Chile, Ecuador, Panama, Aruba and the Netherland Antilles.
MoneyGram also added 335 locations from its alliance with Banco de Credito, the largest bank in Peru. The World Bank estimates that Peru received about $2.5 million in remittances, primarily from US, Spain, Italy, Argentina, Chile and Ecuador
The third agent is Banco Vision, the largest bank in Paraguay, which has already started offering MoneyGram’s services through its 70 branches across the country. Banco de Credito and Bancolombia will introduce MoneyGram’s services at their branches by the third and fourth quarter of 2011, respectively.
MoneyGram is expecting an improvement in the economic conditions of Latin America in the remaining part of 2011 and 2012, and thereby, a surge in the number of remittances in the region, making these alliances lucrative.
The new agents are part of MoneyGram’s vast expansion plans in the US as well as internationally. It already has more than 233,000 agent locations in more than 191 countries. Recently the company formed alliances with Al Barid Bank in Morocco, North Carolina-based Friendly Check and RiteCheck and renewed its contract with Canada Post. Last month MoneyGram had also opened its first office in Manila, Philippines. MoneyGram aims to strengthen its market position against competitors like Western Union Co. (WU) with these alliances.
MoneyGram is scheduled to release its earnings result for second-quarter 2011 before the market opens on 28 July, 2011. Currently, the Zacks Consensus Estimate for second-quarter 2011 earnings stands at 2 cents per share, reflecting a 108% jump year over year while for 2011, it is 11 cents per share, reflecting a 108.20% surge from the last year. It carries a Zacks #3 Rank, which translates into a short-term Hold rating.
On Friday, the shares of MoneyGram closed at $3.56, up 1.42%, at the New York Stock Exchange.
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