COUNTRY PROFILE
Total land area:....................75,990 sq. km.
Official language:................ Spanish
Administrative divisions:..... Nine provinces and one territory
Legal system:..................... Based on civil law; judicial
review of legislative acts in the
Supreme Court of Justice; accepts compulsory ICJ jurisdiction,
with reservations.
Executive branch:.............. Chief of state and head of government‹president,
first vice president
and second vice president elected to five-year terms by popular
vote.Cabinet appointed by the president.
Legislative branch:............. Unicameral Legislative Assembly
(72 seats).
Judicial branch:.................. Supreme Court of Justice (nine
judges appointed for 10-year
terms); five superior courts; three courts of appeal.
ECONOMIC PROFILE
Currency: Balboa (B)
GDP: US$7.4 billion (1997)
Real GDP growth: 4.2 (1997p)
GDP (average annual growth rate): 2.9 (1988-1997)
GDP per capita (1990 US$): 2,721.8 (1997)
Consumer price index (average annual growth rate): 1.2% (1997)
Nonfinancial public sector fiscal balance (% of current GDP): -0.6
(1997)
Money supply (M1) (% of GDP): 9.4 (1997)
Interest rate (average rate offered by deposit money banks on six-month
time
deposits): 7.1 (1997p)
Current account balance: -US$0.24 billion (1997)
Trade balance: -US$0.56 billion (1997)
Main exports: Bananas, shrimp, coffee.
Main imports: Capital goods, food products, oil.
Nominal exchange rate (B/US$) end of period: 1.0 (1997)
Real effective exchange rate (Index 1990=100): 116.2 (1997)
BANKING SYSTEM
Total number of banks in the system: 100 (September 30, 1998)
Types of banks: 2 official, 57 general license, 28 international license,
13 license of
representation banks.
Total amount of assets: US$35.67 billion (August 31, 1998)
Total amount of deposits: US$ 26.4 billion (August 31, 1998)
Total amount of capital or net worth: US$2.97 billion (August 31, 1998)
BANKING INSTITUTIONS
I. Banking Supervision
1. The entity responsible
for supervising banking organizations is the Superintendencia\
de Bancos.
2. The Superintendencia
is politically independent as well as administratively and
financially autonomous.
3. It is held accountable
to the Constitution of the Republic of Panama, although its
budget is determined by the Comptroller General.
4. Continuous supervision
of banks takes place through the analysis of published
reports. On-site inspections occur at least twice a year, but can occur
at any time.
5. There are no safety
and soundness categories.
6. In practice, there
is a tendency to use the CAMEL system to evaluate banks,
but other systems can and are used in conjunction with CAMEL.
II. Consolidated Supervision
1. Panama performs
consolidated supervision.
2. Prior consent is
required from the host country to open a banking office.
3. The consent of
a foreign bank¹s home country is required to open or close an office
in Panama.
4. The home country
has the right to request information from cross-border banking
establishments.
III. Interest Rates
1. Interest rates
on loans are defined exclusively by the market.
2. Interest rates
on deposits are defined exclusively by the market, although incentive
programs intervene in the final determination of the interest rate in favor
of the
agricultural sector.
IV. Deposit Insurance
1. There is no system
of deposit insurance in Panama.
2. Insurance limits
are not applicable.
V. Trade Finance
1. Panama has no formal
or legal definition of trade finance.
2. The sovereign does
not bear the risk of trade finance vehicles.
3. In cases of bank
liquidation, trade finance vehicles receive the same treatment as
domestic finance vehicles.
4. The banking system
does not make specific provisions or require reserves for
treatment of trade finance obligations during bank liquidations.
VI. Capital Adequacy
1. The minimum required
capital to open a bank is 10 million balboas to operate with
a general license and 3 million balboas to operate with an international
license.
2. The minimum required
capital to maintain a bank in operation is 8% of weighted
assets.
3. This allows for
two categories, adequately capitalized and inadequately capitalized.
VII. Asset Quality
1. Loan portfolios are classified as follows:
Loan Classification
Definition
% of Reserves
Category A
Normal
-
Category B
Special mention
-
Category C
Deficient
-
Category D
Doubtful or uncertain
50
Category E
Total loss
100
2. There are no minimum reserve requirements on bank assets.
3. The legal lending limit to one client is 25% of net worth, with or without
collateral.
4. Investment portfolios are required to be classified as hold-to-maturity
portfolio,
available-for-sale portfolio or trade portfolio.
5. There is no investment portfolio valuation method.
6. The impact of the valuation on the profit and loss statement is not
applicable.
VIII. Liabilities
1. There are no minimum reserve requirements on bank liabilities.
2. Demand deposits, time deposits, savings deposits, at-call deposits and
overnight
deposits are available in local or foreign currency.
3. There is no limit on the amount of deposits a bank can accept.
4. There is no limit on the concentration of specific types of deposits.