Panama: Banken
From Handelswijzer Midden-Amerika
Features
In April 2007, Panama's banking system comprised 40 banks with general licences, of which 15 had Panamanian capital and 25 foreign capital; 37 banks with international licences, of which two had Panamanian capital and 35 foreign capital; eight offices licensed as agencies; and two official banks (the National Bank of Panama and the Savings Bank). The banking sector had some 14,800 employees on that date. In June 2006, the banking sector's consolidated activities represented a total of B 47,660 million. The banking sector's share of GDP in 2006 was 6 per cent.
In recent years, credit levels have risen sharply; for example, domestic loans in the private sector increased by 14.4 per cent in 2006. Local banks (whose capital is mainly Panamanian) accounted for 72 per cent of loans in 2006; foreign banks (those whose headquarters are abroad) for 28 per cent. As for deposits, local banks held 75 per cent in 2006. The solvency and profitability indicators for Panamanian banks are high, as are the liquidity indicators. The wealth/assets ratio was 12.16 per cent in December 2006; the ratio of liquid assets to total deposits was 27.04 per cent. The non-performing loans ratio (loans in arrears as a percentage of total gross loans) is low, around 1.48 per cent in December 2006 and provisions for loans as a percentage of net loans was 1.90 per cent. 89. Interest margins are fairly low: the margin between the average lending rate applicable to businesses in December 2006 (8.66 per cent) and the borrowing rate for a legal person at the same date (5.05 per cent) was 3.61 per cent.
Regulatory framework
The Banking Supervisory Authority is responsible for oversight of all the banks established in Panama. Foreign banks holding a general licence are supervised jointly with the relevant foreign supervisory body, without prejudice to compliance with the provisions of Panama's banking law; branches or subsidiaries of foreign banks holding international licences are overseen by the Authority and must respect the technical criteria laid down in the legislation and by the foreign regulatory authority.
The regulatory framework for Panama's banking sector is mainly to be found in Decree Law No. 9 of 26 February 1998 (Banking Law). A licence issued by the Supervisory Authority is required to engage in banking activities within or from Panama. The Law provides for three types of licence: (a) general licences, which allow banking in any part of Panama and transactions that are completed, conducted or have effect abroad, as well as any other activities allowed by the Authority; these licences may be granted to both Panamanian and foreign banks, the latter being established as branches or subsidiaries; (b) international licences, which allow transactions completed, conducted or having effect abroad to be managed from an office set up in Panama and also to carry out any other activities allowed by the Authority; and (c) agency licences, which only allow one or more agencies to be set up in Panama, as well as the conduct of any other activities allowed by the Authority. Foreign banks must obtain prior authorization from their foreign supervisory body in order to carry out banking activities within or from Panama or to become established as agencies. The minimum capital required for a general licence is B 10 million and for an international licence it is B 3 million. There is no minimum capital requirement for an agency licence.
In addition to meeting the minimum capital requirement, the granting of a licence requires the submission of a business plan showing the bank's viability and its contribution to Panama's economy. The Supervisory Authority must evaluate the application and approve or reject it within 90 calendar days following submission of the requisite documents. Detailed procedures for the granting of licences are contained in Banking Supervisory Authority Agreement No. 3-2001 of 5 September 2001. No licence is required to open branches or establishments in Panama, but prior notification must be given to the Authority. The opening of establishments abroad must receive prior approval from the Authority.
Banks with general licences must maintain capital funds equivalent to at least 8 per cent of their total assets and off-balance-sheet transactions, weighted according to their risks. These banks must keep a minimum balance of liquid assets equivalent to the percentage of the gross total of their deposits in Panama or abroad fixed periodically by the Supervisory Authority. This percentage must not exceed 35 per cent. All banks must keep assets in Panama equivalent to a percentage of their local deposits determined by the Authority according to the national economic or financial situation. This equivalent amount is the same for all banks and may not exceed 100 per cent of the said deposits. In April 2007, the percentage was 85 per cent.
Banks may not acquire or own shares or holdings in any other non-banking-related companies in an amount exceeding 25 per cent of the bank's capital. Banks are also prohibited from directly or indirectly giving a loan to a single natural or legal person or undertaking any other commitment with such a person if the total exceeds 25 per cent of the bank's capital. Banks with international licences are not subject to these restrictions.
Foreign banks are given national treatment in accordance with the type of licence they have been granted. There are no nationality requirements applicable to board members and directors of a bank. Branches of foreign banks, however, must appoint at least two general agents, both natural persons resident in Panama, at least one of whom must be a Panamanian national.
The Banking Supervisory Authority has adopted the basic rules on capital adequacy laid down by the Basel Committee on Banking Supervision and requires a minimum total capital-to-riskweighted assets ratio of 8 per cent. The Authority requires banks to submit information on their asset situation and on compliance with technical and operating rules, together with information of an institutional nature.
Panama has no deposit insurance as such. Nevertheless, preference is given to depositors with up to US$5,000 when a financial intermediary is dissolved.
A tax on banking transactions applies above a certain amount. Article 128 of Law No. 22 of 27 June 2006 provides that the interest rate on local personal and business loans exceeding B 5,000 granted by banks and financial entities as of the entry into force of the Law shall include and retain an amount equivalent to 1 per cent annually of the amount used as a basis to calculate the interest. Of this amount, 50 per cent goes to the Agricultural Development Bank and the remaining 50 per cent to the Fondo Especial de Compensación de Intereses – FECI (Special Interest Compensation Fund).
The FECI was created by Law No. 4 of 17 May 1994 and its implementing regulations are contained in Executive Decree No. 29 of 8 August 1996. It establishes a scheme for loans on preferential terms for the agricultural sector by means of a mechanism that consists in the Fund's financing a discounted interest rate agreed with the lending bank or financial institution. The maximum amount is B 200,000 and the maximum duration is one year. Each year, 75 per cent of the surplus in the FECI's operations goes to the Agricultural Development Bank and 25 per cent to agricultural credit cooperative associations at an annual interest rate of 1 per cent. The authorities have indicated that, in 2006, the FECI received funds amounting to US$20 million.
Bron: Organization of American State's Foreign Trade Information System (SICE)
