financial

Report shows that Panama’s banking system remains on solid footing

The system has high rates of liquidity and capital reserves, according to officials.

la prensa

bucking the trend: Panama’s banking system has not experienced the woes facing the international finance community. 1165263

The performance of the national banking system in 2008 shows a sector with high liquidity and strong capital, according to Banking Superintendent Olegario Barrelier.

During a presentation on the state of the banking system last week, Barrelier said that there is “a positive local environment.”

Panama seems to be in better shape than many other countries around the world, including the United States, where 14 financial institutions have declared bankruptcy so far this year.

Locally, the global financial crisis has caused some fear among customers, said Moisés Cohen, chairman of the Banking Association of Panama. But the reality is that “bank liquidity remains high,” he said.

Barrelier said that a positive sign for the system was that the pace of growth in domestic deposits was above that of domestic credit, with rates of 14.9 percent and 14.4 percent respectively.

During the last quarter of 2008, external difficulties began to affect such things as the speed of credit growth, which impacted the sectors of trade and consumption, said Barrelier.

Furthermore, some sectors found it more difficult to access foreign credit lines.

Despite this, the report of the Superintendency of Banks maintains that there is a high rate of disbursement of loans.

The international environment has meant that banks that have a high amount of liquidity are viewed as being more stable than their peers.

The lack of a central bank in Panama has meant that the individual institutions have had to have a more conservative lending model, said Ernesto Bazán, manager of the risk rating firm Equilibrium. This has led to banks investing in instruments that can be sold quickly if it needs to raise cash.

Panama’s private banks have lines of credit available to them that mean they can quickly raise capital if they need it.

The banks also are maintaining a level of liquidity that far surpasses the amount required by the government, which puts them in a position to weather any upcoming financial difficulties.

Además en Herald

• Insecurity hinders Colón
• Ridgley wants to prove innocence
• Cabinet considering tax exemption
• Opinions divided on flat tax
• Report shows that Panama’s banking system remains on solid footing
• High voter turnout expected in May
• Gang-related police deaths raise concerns
• Prank calls plague new 911 emergency service
• Cabinet considering tax exemption