The evolution of the concept of bank creditworthiness (solvency)

In a theoretical case of a bank liquidation, the assets should cover the deposits by the general public and the shareholder capital.

Wednesday, August 13, 2008

Banking legislation in force in Guatemala from 1926 to 1946 established a capital to deposit ratio with deposits that were 10 times higher than capital. If the capital was 100 then the deposits could be as high as 1000. If they wanted to increase the deposits, they had to increase capital.
Based on this concept, the greater a bank's obligations are, the greater its capital and reserves should be.

More on this topic

AIG assures creditworthiness in El Salvador

September 2008

AIG El Salvador, a subsidiary of American International Group, affirmed that its has the ability to pay for its commitments in the country.

In a release, AIG - which operated in El Salvador under the names of AIG Union y Desarrollo S.A and AIG S.A. Seguros de Personas - says that the credit granted to company last week in New York by the US Federal Reserve "will allow us to meet liquidity needs in the short term."

Intevention in ES Bank in Panama

July 2014

The Superintendency of Banks in Panama has taken over administrative and operational control of the bank due to its potential illiquidity and insolvency.

From a statement issued by the Superintendency of Banks of Panama:

Based on the provisions of Chapter XVI and Articles 131, 132 and related provisions of the Banking Act, by Resolution 097-2014 of 16 July 2014, the Superintendency of Banks of Panama has ordered the takeover of Administrative Control and Operations of ES BANK (PANAMA), SA effective from July 17, 2014 at 12:00.

Panama: New Calculation of Capital Adequacy Ratio

March 2009

The new provisions for calculating Capital Adequacy Ratio will be coming into force in Panamanian banks on April 1.

Assets that under the current rules were weighted at 100%, with the change will be weighted at 125% and 150%.

The general manager of Equilibrium risk rating, Ernesto Bazán, stated in an article in Prensa.com: "This means that assets, as measured by their risk will be higher and, therefore, the capital adequacy ratio of the Panamanian banking system will be reduced globally. It is currently at 14.3% and it could drop to 13.8% or less with the change."

Wealth Management

February 2012

Clients of wealth management programs are those who hold capital investment worth over $250,000, requiring services to guarantee its duration and growth.

In Latin America there is an increasing number of young people who have reached an economic level that has allowed them to pay for their homes, provide basic education for their children, build savings, and who want to consolidate their future in terms of higher education, gain security with health plans, and obtain additional income for their retirement plans.

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