Banks Flock to Panama to Seize Canal Expansion Opportunities

May 2, 2007
Panama City, Panama

At least six new banks have recently applied to Panama’s Bank Superintendency for permission to install local branches. That may sound like a lot of new business for this tiny Isthmian nation, but Panama’s financial district has long attracted banks from around the world. Nearly every major bank has a branch here--including Citibank and HSBC--and a wide range of countries are represented…from Brazil to France to South Korea to Costa Rica (you can see a list of banks registered in Panama at the Superintendency website).

Panama’s international banking center is the largest in Latin America. (Banking alone accounts for about 11% of Panama’s gross national product, or GNP.) Powerful incentives like Panama’s renowned banking privacy principles as well as its rock-solid trusts makes banking here very attractive. Panamanian laws protect anyone who banks here, and foreigners are guaranteed the same rights as local investors…great news for the hoards of expats that have recently moved here.

The imminent Panama Canal expansion mega-project--a $5 billion undertaking--is the latest (and most powerful) draw for the world’s banks. Not to mention the pending U.S.-Panama Free Trade Agreement (FTA), another compelling factor boosting Panama’s appeal.

The latest institutions to apply for local permits hail from France, Switzerland, the Caymans, and Honduras (the Bank Superintendency has not yet released the bank names). In addition to these applicants, the Superintendency says another eight banks--from countries such as France, Guatemala, China, Venezuela, and Brazil--have expressed interest in establishing branches in Panama. In 2006, the Superintendency granted permits to eight new banks, for a total of $392 million in registered assets.

New banks create jobs and boost the economy. This kind of growth also makes conducting business and attracting foreign investment even easier than before. In a country that’s already booming, this is more good news for anyone with a stake in Panama. Recent economic statistics help to further put the boom in perspective: The Panama comptroller reported that foreign investment in 2006 grew 149% as compared with 2005, and the International Monetary Fund, or IMF, says in 2007 Panama’s economy will grow some 6.6% over 2006.

Best regards,

Jessica Ramesch
Editor, Panama Insider