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Panama banking after 40 years holds $64 billion

This is a good overview on the history on banking in Panama and provides some interesting statistics such as the fact that over $60 billion is currently held here in over 90 banks.

The Bank Act of 1970 allowed the development of the financial center of Panama, which has emerged unscathed from various crises, including 2008.


Machine translated from La Prensa

EVOLUTION. The Panamanian banking center there are 91 banks with assets of $ 64 000 438 000 000 and a liquidity ratio of 65.87%. PRESS / Maydée Romero Sprang1422806


While the banking business in Panama dates back to well before the Republican era back in mid-nineteenth century , it was not until 1970, with the enactment of the Banking Act, the first Cabinet Decree N ° 238 July 2, 1970 - which began the real development of this business, and with it the flowering of Panama s international banking center.

40 years have passed this historic initiative, which involved a group of well-known bankers.

Among them were the economist Nicolás Ardito Barletta, Louis H. Moreno, then general manager of Chase Manhattan Bank, José Antonio de la Ossa, who served as Minister of Finance and Treasury, Balbino Moreno, comptroller, Robert Willis, vice president and general manager of Citi Bank, Arthur Miller, who was deputy manager of Banque Nationale Paris and other contributors.

The law achieved its primary objective: to encourage the presence of foreign banks from around the world, enabling the development of an international financial center took advantage as the use of the dollar as legal tender, the absence of restrictions on capital markets and the absence of a central bank.

At that time the system was composed of only 23 banks, two of them state-with assets totaling $ 853.6 million and a workforce of 881 employees 2000. Twelve years later, those assets soared to $ 40 billion, with the presence of 118 banks and 428 employees 7000.

In its evolution, the banking center grows and specializes in financing to Latin America, its main market.

For 1983 reached its peak with the presence of 125 banks, which operated 68 general and 43 licensed international license, the highest number of banks in school history.

The greatest achievement of Decree 238 of July 2, 1970 was the creation of the National Banking Commission, the first regulatory body for this activity.

Luis H. Moreno, who was a member of that Committee and editor of the banking law, says that one of the first tasks of this organization was to establish serious requirements for licensing, while eliminating 247 banks operating license granted under Act 101 of 1941 a standard "incomplete and not very stimulating" in less than 30 articles.

The political and economic crisis of the late 1980s hit hard in banking, who saw off their assets in 1989 to $ 11,593 000 000 and the number of banks started to decline from 110 in 1990 see table . Overcome this crisis, in 1998, when banking assets totaling $ 28,495 000 000, the law is reformed by Decree Law 9 of February 26 and creates the Superintendency of Banks.

With this new provision has been incorporated into the rules and principles of the Basel Committee established a legal framework with clear authority and powers to the regulator, and strengthened the institutional aspect by providing administrative and financial autonomy to the Superintendency of Banks.

In 2008, at the gates of the worst global financial crisis, was modified and modernized the Act 9 in a single text, in areas such as bank resolutions, race banking supervisor, customer service and greater authority to the superintendent.

To date, the center operates 91 banks with assets of $ 64,438 000 000 and a liquidity ratio of 65.87%.

For the president of the Banking Association of Panama, Moses Cohen, from here forward the priority is the "internationalization" of banking services to more dynamism and strength to the financial center.

He stressed that the financial crisis was a test where the Panamanian banking system overcame and showed his strength.

Luis H. Moreno reaffirms this position. "The reliability and robustness of the system were tested by this crisis, and instead of lowering the operating level, the Panamanian banking received a considerable increase in international deposits," he said.

The prospect, he says, is flattering while driving with honesty, efficiency and responsibility that has been done so far. "Given the importance of Panamanian and foreign investments that are taking place, could return some of the prestigious giants who joined us in the first stage of the banking center and retired," he said.


Fair value
The banking regulator from the perspective
Amauri Castillo

OPINION. Panama has developed a vocation as a provider of international services as a financial center and still have a long future, but more towards the Latin American market. The Panamanians throughout our history we have shown that momentous issues of national priority and we can overcome personal and political interests and put the country ahead.

The Banking Act of 1970, the Colon Free Zone and the Panama Canal are three examples. The main component of the 1970 Act was the promotion, to attract the Panamanian banking center frontline institutions around the world and that purpose we have succeeded in spades.

In 1998 the country was decided to have a banking legal framework to respond to the highest international standards, particularly the Basel Concordat, and on the basis of focus or reform the supervision and strict prudential regulation issues.

However, as this is an industry and a highly dynamic sector in 2008, before the financial crisis, the authorities deemed appropriate legal framework to introduce the concepts already pointed to the new Basel II capital accord, with emphasis on monitoring based on risk and making more rigorous market discipline.

In addition, the Superintendency has set its Strategic Plan 2010-2012, which seeks to consolidate with Panama as an international banking center in Latin America and that leads us to study with great thoroughness banks objectives of the region and the OECD to invite them or increase their presence in our plaza, which now has the additional element of being in the privileged category of investment grade.

In domestic terms, the country has a myriad of opportunities with the public investment plan of over 13 billion dollars and the expansion of the Canal. The country continues to grow and in the same way as a regulator of banking and I am proud to be part of sector.El author is secretary general of the Superintendency of Banks.

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