|
 |
|
 |
||
|
|
|
With its skycrapers glinting in the intensely bright sun, the center of modern Panama City resembles a miniature Manhattan. Panama has the most modern and successful international banking center in Latin America. The International Banking Center (IBC) is made up of 90 banks – of these 43, including the two official banks – have a General License, 32 have an International License and seven a Representation License. In addition, there are 14 representative offices. In 2008, growth the banking system total assets was 21.7% while the rate of new loan disbursements grew a 41.5% compared to the other sectors. As of August 2008 banking center’s net income gains amounted 824 million dollars, an increase of 24.5% compared to the 2007 period. By the end of September 2008 credit portfolio increased 19% and deposits 24%, while liquidity rounded approximately 60%. Banks have increased and will increase interest rates on loans. This will change the order of investment planned by potential investors and will surely impact personal finances. According to the Superintendence of Banks, foreign banks have been the first to begin raising their funding rates. During 2007, the fastest growing segments in Panama’s Banking Center were:
Banks that increased their growth during this period were: Banco General, HSBC, Global Bank, Citibank and Multibank. The Panamanian banking system has several strengths, from the organizational point of view:
International Banking Center of Panama There are three type of banking licenses in Panama: the General License allows undertaking local and foreign operations. On the other hand, the International License only authorizes for foreign operations, but there is allowed participation in the national interbank market. The Representation License is granted to the offices of foreign banks from which there is performed the marketing of services, as well as visits of active and potential clients in Panama and the region. Law No. 10 of 2002 establishes norms to the microfinance system, authorizes the organization and functioning of Microfinance Banks, as financial entities that channel resources to micro and small borrowers whose activities are developed in urban and rural areas. This type of banks are regulated by the Bank Superintendence, and their total loan portfolio must have as a minimum 75% of credits with a personal guarantee and must not exceed the 1% of the net patrimony. On the contrary, the loans with a real guarantee must not exceed the 3% of the net patrimony of the bank. For these purposes, it is defined as Micro business the natural or juridical person that creates an economic unit that produces gross revenues or annual invoicing of up to the sum of US$25,000. Differently, the Small Company is the natural or juridical person that constitutes an economic unit with gross income or annual invoicing for an amount between US$25,000 and US$100,000. The Microfinance Banks must have a minimum paid in capital of US$3 million dollars. Today there are only two banks with a Microfinance license and at the month of September of 2006 the loan balance for this type of credit grew to the sum of US$39 millions. The National Banking System names General License Banks, including the two official banks – Banco Nacional de Panamá and the Caja de Ahorros – and the multinational Banco Latinoamericano de Exportaciones (BLADEX). Up to the month of October 2006, it was recorded that the banks of the system had assets for a value of US$36,303 millions. The International License banks had assets which added to US$7,064 millions. The private banks with General License presented assets for US$31,396 millions, and of these, US$15,532 millions are found in private Panamanian banks and US$15,864 millions in foreign banks. As of the year 2007 the participation of the Panamanian private banking will be reduced in the local market as a result of the purchase of the largest bank in Panama, the Primer Banco del Istmo (Banistmo), transaction completed by the HSBC bank. The official Banks have assets for US$4,906 millions of dollars. The International Banking Centre began as a result of the advantages of the previous legislation, approved in 1970. This was replaced in 1998 by a new banking law that created the Superintendence of Banks, an institution with complete autonomy, independence and ample powers to practice a strict supervision, including the consolidated supervision of the foreign banks. The law also incorporated other statutes, those of adequacy of capitals based on the average assets according to the risk, further to the guides of Basilea. The Superintendence and the Association are in the analysis and discussion phase of the eventual and programmed adoption of the new Capital Agreement of Basle II. A section of these dispositions is being incorporated to the existing regulation and the rest will be adopted slowly. The new banking law will maintain:
Panama has unique advantages for banking, financial and commercial businesses, due to the absence of a central bank, a monetary authority and paper currency. Another fundamental characteristic is the use of the North American dollar as the currency legal tender, which has contributed to strengthen the Panamanian IBC from the financial crisis. Recent Transactions Mayor merger agreements have been key for the financial market, and will bring new opportunities for the country. In 2006, the banking sector registered several acquisitions. The purchase of Banistmo by the British HSBC, was one of the most important happenings for this sector, completed on 20 July 2006. The purchase agreement was done by way of US$1, 700 millions. At the level of this purchase there were undertaken other agreements such as that of the Continental financial group which acquired the operations in Panama of Banco Atlántico by the way of US$96 millions, where Citigroup purchased the Uno financial group and Corporación UBC Internacional, owner of Banco Cuscatlán. The Banco Aliado made with the retiree loan portfolio of Bancafé. Another of the banks that opens doors with operations in Panama is Stanford Bank. It will have a seed capital of 15 millions. This group has 70,000 clients in 102 countries and 3,000 multinational employees. One of its main characteristics is that it is kept as a private business and directed to the high end segment of the market. Founded in 1932 as a family business, after 75 years it is a global network of companies that provide financial services. Its executives expect that the bank will have US$100 millions in assets at the end of 2007. Between 2007 and 2008 there have been other mergers, acquisitions, transfer of shares and transactions, albeit on a smaller scale. For example, by means of Resolution S.B.P. No. 079-2008 of March 19, 2008, transfer of specific assets and obligations of Banco Agricola (Panama), S. A. to Bancolombia (Panama), S. A. was authorized. Once this process is concluded “Petition of voluntary winding-up of Banco Agricola (Panama), S. A. shall be filed” Other transaction of this type: Resolution SBP No. 012-2007 of February 15, 2007 authorized Banco Panameño de la Vivienda, S.A. to acquire a fifty percent (51%) of issued and outstanding shares of the company Giros & Finanzas Compañía de Financiamiento Comercial, S.A. Transparency and regulation The Latin-American Federation of Banks (“Federación Latinoamericana de Bancos”) (FELABAN) has considered of main importance to make a collection of the totality of the existing legislation regarding money laundering of assets in Latin-American countries members of the Federation. Panama’s banking law (Decree No. 9) meets the standards of leading financial centers around the world for transparency and regulation. The organism that has coordinated with most success the international initiatives against money laundering is the Work Group of Financial Action regarding Money Laundering (“Grupo de Trabajo de Acción Financiera sobre el Lavado de Dinero”) (FATF). In 1989, the increasing worry that awoke the threat of Money laundering to the international financial institutions and the banking system, moved the leaders of the Group of Seven (which include the heads of state of Germany, Canada, United Status, France, Great Britain, Italy and Japan) to establish the FATF. This new intergovernmental work group, with the capacity to set policies, was assigned the resonsability of examining techniques and tendencies of money laundering, the previous nacional and international action and determines additional measures against money laundering. To date, the members of the FATF are two organizations – the European Commission and the Cooperation Council of the Gulf -- and 29 countries and territories: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Holland, Hong Kong, Ireland, Iceland, Italy, Japan, Luxembourg, Mexico, Norwegian, New Zealand, Portugal, United Kingdom, United Status, Singapore, Spain, Sweden, Switzerland and Turkey. In 1990, to establish a worldly structural frame of the efforts against Money laundering, the FATF issued The Forty Recommendations. Today, this collection, which included the measures, is the main international norm against Money laundering. The Forty Recommendations and the Interpretation Notes cover the criminal justice system and application of the law, the financial system and its regulation and the international cooperation. The recommendations establish principles of action and provide to the countries the flexibility to apply them according to their circumstances and particular laws. Although it is not a mandatory international convention, many countries have acquired a political compromise to fight Money laundering by means of the application of the recommendations. Moreover, Panama has turned into one of the leading countries supporting the FATF and OECD movement to implement measures in international financial centers to cope with capital laundering and terrorist financial activities. Tighter controls have been put on banks to report all deposits and withdrawals of more than $10,000, identically as done in the United States. Bankers’ awareness that Panama has to clean up its image is also making them more thorough about checking the credentials of new customers. The “know your customer” policy includes tighter reference requirements and origin of funds. Nevertheless, banking secrecy continues in place. Panama´s Stock Exchange In addition, Panama is one of the most secure international offshore centers in the world. The Panama Stock Exchange is one of the fastest-growing in the region. Since beginning operations in 1990, the local securities market suffered a positive transformation that allowed the widening of the market and increased the number of intermediaries in the first decade of operations. The Market made negotiations of over US$925 millions in titles of the primary market and more than US$200 millions in the secondary market. The transactions of the BVP are undertaken by the intermediation of persons authorized and qualified by the CNV. Panama’s Stock Exchange closed 2008 with 1.932 million dollars trading volume. Credit constraints in international markets, as a result of global economy crisis, represent some opportunities for this institution. In its 18 years of existence, is the first time that a world class bank seeks fresh money here (as have already done banks in Central America). This is the case of Spanish BBVA, which is currently finishing the last details for issuance of corporate bonds in the amount of $ 100 million. Economists predict these bonds will be placed easily. Investment Opportunities There are diverse opportunities for investment capital financing, insurance and re-insurance in the financial sector. Deposits collected from abroad have risen by 40% in the last 12 months, according to the Superintendence of Banks. The banking system has become more attractive in the context of financial crisis and regional political instability. Panama´s banking system has effectively achieved the following, among others factors:
Decree Law No. 2 (February 22 of 2008) amending Decree Law 9 of 1998, which reforms the banking system creating the Superintendence of Banks establishing the entity’s functions and objectives regarding banking institutions and any person engaging in banking business in or from Panama. Besides it defines licensing conditions and terms which are commonly in banking activity, such as productive assets, foreign bank, Panamanian bank, banking standard-form contract, and others. It also defines functions of the Superintendence Board of Directors and the figure of the Director, administrative matters and regulation and supervision rates for the banking industries. This proven commitment by the Republic of Panama against money laundering and financing of terrorism includes both the public and private sector, guarantees that Panama shall continue in this crucial endeavour and fully understands the importance of international coordination and cooperation. For more information about Investment or Business Opportunities, please click here to contact us.
| | ||||||||||||||||||||||
|
 HOME
 CONTACT
US  SITEMAP |
 |
Designed by Token Studio |
|
Most photos are courtesy of IPAT and Alfredo Maíquez |
