Panama Investor Blog

Banco General awarded "Best Bank in Panama in 2009

The financial magazine LatinFinance General Bank awarded "Best Bank in Panama in 2009" in its latest edition of the Bank of the Year awards, results published in the November issue and on its website www.latinfinance.com.

To choose the best banks in each country, the magazine takes into account, among other variables, path consisting of the results and demonstrated capacity for growth and innovation.

Panama, among the best according to Financial Task Force (FATF)

According to an article in La Prensa, Panama is rated just behind the U.S. in compliance with money laundering regulations.

The enforcement staff report conducted by the Financial Action Task Force (FATF), based on a review of compliance with its 40 recommendations for the prevention of money laundering, plus nine special recommendations on terrorist financing, remains to Panama between top with best rating.

  The report, which summarizes the evaluations of FATF since 2005 and is updated the first quarter of 2009, noted that Panama stands fourth in the list of 44 countries and jurisdictions participating in the evaluation, with only below States USA, Singapore and Belgium, reports the Superintendency of Banks.

 From the list of the 40 +9 recommendations evaluated, Panama met in full and largely 39 and partly with nine of the recommendations specified by the FATF for the prevention of money laundering and terrorist financing.

 The FATF is an intergovernmental body whose purpose is to develop and promote measures to combat money laundering and terrorist financing.

Noose to tighten on U.S. citizens with foreign bank accounts

The Obama administration is making it clear that they will do everything they can to keep money from the leaving the country and this latest maneuver may just end the ability for U.S. citizens to use offshore bank accounts entirely. Not because there will be a law against it, but because the penalties imposed on foreign banks for refusing to disclose beneficial account holders will be so punitive that no bank will want any U.S. citizens as customers.

You do not need a crystal ball to know that the future for the U.S. taxpayer with more than most will be "asked" to pay more than their fair share in order to spread the wealth through the administrations tax and spend policies. If banks won't accept U.S. clients then all monies held outside the U.S. would have to be repatriated. 

Bob Bauman gives a good overview of the latest attack on individual sovereignty on his blog.

Excerpt;

As is well known, for several years offshore tax havens and Americans who dare to exercise their right to engage in legal offshore financial activity, have been under continuing attack by left wing, redistributionist Democrats, including then senator, now President Barack Obama.

Now, with Obama's personal blessing, congressional Democrats have introduced a radical legislative proposal that would give the U.S. Internal Revenue Service (IRS) new weapons to "detect, deter and discourage" the use of foreign bank and other financial accounts that might be used for avoiding U.S. taxes.

The questionable basis for this latest leftist assault on Americans' personal and financial privacy is the unproven allegation that millions of Americans are evading billions of dollars in taxes by hiding cash and activities offshore.

Read the rest of the story here...

Deposits in Panama banks grow 25% to $15 billion

There are several factors working in favor of Panama banks attracting such a significant increase in capital. Much of it is  probably a pull out of investments and into cash as the economy continues to worsen. Also Panama has still not signed on to information exchange with the OECD and Panama banks are a lot safer for peoples of Latin countries with leftist rulers.

1285975 EDITH CASTILLO DUARTE EDITH CASTILLO 1285975 DUARTE
ecastillo@prensa.com ecastillo@prensa.com

 Even in crisis, Panama is an attractive place for foreigners.  Abstractions or private foreign deposits recorded a balance of 14 thousand 996 million dollars by the end of August this year, an increase of 25% compared to the same period of 2008.

  This substantial increase, but surprised analysts, according to bankers is the sign that confidence is returning and that markets have stabilized.

  Panama also is benefiting from being the only country in the region which retains its growing economy.  70% of these deposits comes from Latin America, especially Venezuela and Ecuador, two countries with greater instability in the continent.  Financial integration of the system allows greater access to external funds.

Panama continues to attract lenders

It seems Panama does not have a problem in borrowing capital these days. I only hope that she has the ability to pay it back without saddling its inhabitants with a heavy tax burden. If that can be avoided it will be a first in the history of world governance. As the article points out, Panama external debt currently stands at over $11 billion. With an annual budget approved this month of about $11 billion and a GDP of about $20 billion, Panama has an extremely high debt ratio before additional borrowings. 

Machine translated from La Estrallia

MANUEL LUNA G.
mluna@laestrella.com.pa mluna@laestrella.com.pa

  The Panamanian government will use the funds for investment and social projects

  PANAMA. The government of President Ricardo Martinelli may benefit during the next five years of a credit line of one billion dollars with the Andean Development Corporation (CAF).
 The agreement was approved yesterday by the National Economic Council (CENA) and must be ratified by the Cabinet Council.
 The MEF's budget director, Omar Castillo, said the proceeds will be used for investment programs and social projects, but added that "this does not mean they will use everything in this moment."
CAF already disbursed $ 54 million was allocated to the Secretariat of the metro.

Castillo said the financial institution is interested in funding regional mega projects listed on the agenda of the current administration.  In July last year, Panama became a full member of this body, which is headquartered in Caracas, Venezuela, and is composed of 17 countries in Latin America, the Caribbean and Europe.

Panama's foreign debt last September to amounted to 11,079.84 billion, of which $ 442 million owed to CAF. At yesterday's meeting, also attended by Ministers of social area, who presented a report on grant programs and agreed to conduct a review to determine whether justified or not to continue with them.

Also approved a credit of $ 2 million for Senacyt to meet commitments to scholarship, authorized the National Bank to acquire General Bank branch in Brisas del Golf and terminated the contract with the homebuilders Euro, which would make the extension work National Assembly for $ 2.6 million.

Dollar Reaches Breaking Point as Banks Shift Reserves

With Panama's Balboa tied to the U.S. dollar and many Americans investing or living in the country, important news related to the dollar will be posted on this blog. Here is one from Bloomberg which will undoubtedly have an affect on the dollar and on gold.

Excerpt from Bloomberg:

Oct. 12 (Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

read the rest here.....

Status of Global Bank

I get many questions regarding the strength of local banks here in Panama. Today, La Prensa had a short article on the results of Global Bank. They are a growing bank here in Panama and appear to be doing things right from the standpoint of conservative bank management. For more in depth personal view of the banking industry here in Panama you should read Eduard's blog.

English Translation from La Prensa;

Global Bank closed on 30 June its fiscal 2009, with a positive balance in the two main components of its business, although profits were lower.

  The loan portfolio totaled $ 439 million, an increase of 20% over the previous year.

  The most important segments contributing to this growth were residential mortgages, commercial loans and foreign and local agriculture and construction.

Total customer deposits stood at 420 million billion dollars, 23% more than June 2008. The reported profit was 16.3 million, a decrease of 20% or four million dollars less than the fiscal year-end 2008. The bank manager, Jorge Vallarino, said he focused his efforts on expanding the base of individual and corporate clients and for the next period maintains its expectations for economic growth, but at a slower pace.

  RELEVANT DATA BALANCE SHEET \

  19% - growth of the bank's total assets totaling 2 billion dollars at the end of June.

  24.40% - Increase in time deposits.

  53.54% - statutory liquidity of the bank.

Panama banks report $22 billion in local loans

From La Prensa we learn the the banks report only a slight increase in local loan portfolios as compared to this time last year. The rate of loan increases however has slowed dramatically indicating a pullback in credit since the economic crisis began.

La Prensa

The Superintendency of Banks of Panama reported on Tuesday that as of Aug. 31, 2009, the National Banking System reported a balance upwards of $22 billion "on the local loan portfolio books.”

According to the Ministry of Economy and Finance (MEF), that figure reflects the "cautions and precautionary measures being taken by banks when granting loans, thus contributing to maintaining stability and confidence of depositors and investors."

The balance exceeds by $371 million the same figure reported a year ago and is $387 million over its December 2008 figure.

It was noted, however, that the increase was very modest in comparison, for example, to the growth reported in July 2008, which reached over $3.3 billion compared to the same month in 2007.

Panama: New Credit Cards Down 58%

Looks like the banks are beginning to pull back the credit card punch bowl!

From El Siglo-Machine translated.

From January to June of this year there have been issued 4,458 new credit cards, 6.969 or 58% less with respect to the 11.427 issued in the same period last year, according to statistics from the Panamanian Association of Credit (APC).

 The total credit lines to June was $ 11.2 million, some $ 17.6 million less than in 2008 and $ 31.5 million line of credit granted in June 2007, representing a decrease of 52% and 74% respectively.

The CPA report adds that the average credit line was given approximately $ 2,520 for each new card issued, 6% less compared to the same date in 2008, but 19% more compared to the average credit line granted in June 2007 when the placement of credit cards amounted to 42.824 electronic cards.

CAUTION with  CREDIT
Raul Moreira, president of the Association of Economists, believes the drop in the cards is due to the caution that has been imposed on consumers by the lack of credit. However, aggressive campaigns that are helping the banks to issue new cards should be regulated.

Comment Alcibiadez, sharing Deputy Vasquez Panamanian Party, has proposed a bill in the House of Representatives to regulate emissions that discriminated against in his opinion, issued by financial institutions.

 "The cards are issued without knowing whether the cardholder is ease of payment and this must change," said Vasquez. It is expected that next Wednesday the draft law is adopted on first reading and before the end of this year may be approved.
Moreira and Vasquez both agreed that the card is not the problem, the misuse of the same are the negative part of the electronic board that many are in debt.

Panama throws first punch at OECD

This is going to be very interesting with Panama appealing to the World Trade Organization regarding the sanctions that the OECD is threatening the country with. Sounds to me like a great strategy to take the matter to the WTO. If done properly it will show the hypocrisy of the OECD and its bully boy actions.Round one begins!

La Prensa

Panama takes case to WTO claiming discriminatory treatment

OCDE.  Panama will make representations to the World Trade Organization (WTO) to examine the claims of nations that discriminate the country blacklisted by the Organization for Economic Cooperation and Development (OECD) for tax reasons.  This was announced in a communique from the Foreign Ministry after a meeting between high Government figures and ambassadors accredited in the 30 OECD countries.