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."
The Equilibrium Agency, a subsidiary of Moody's, lowered the ratings from AA+ to AA and modified the forecast from "stable" to "negative."
Prensa.com reports that "this downgrade is in response to "the lower financial strength of its shareholder, which is affecting the support grade assigned in the rating. This has occurred within the context of greater credit risk as a result of the absorption of Bank One in October 2008," the report read."
83% of their resources are internal deposits, thereby creating a shield against the international crisis.
While the banking system in Panama is not 100% immune from the international liquidity crisis, it does have important advantages that help to minimize the impact, declared Ernesto Bazan, general manager of the Equilibrium Risk Agency.
Central American banks were booming -- but close ties with the USA darken their future.
Central American was undergoing an interesting banking system evolution. Now the crisis has hit hard. Remittances have dropped and so has international business. More expensive capital halts investments in infrastructure and global liquidity restrictions will have a strong impact.
Equilibrium, a risk rating firm, predicts a slowdown in the Panamanian banking sector in 2009.
Equilibrium, a risk rating firm and a subsidiary of Moody's Investors Service, Inc., believes that credit stagnation, lower margins and higher provisions will push the results of the Panamanian banks downward.
In spite of inflation and the world financial crises, Panamanians continue acquiring credit cards and the banks have not increased their restrictions.
As of September of this year the banking system credit card balance reached 629.8 million dollars, up 5.6 million dollars as compared to August's numbers of 324.2 million dollars, according to the Bank Superintendent's Office.
In May, Panamanian banks led the earnings ranking in Central America, followed by Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua, in that order.
The report of the Risk Rating Agency, Riesgo Equilibrium, affiliated to Moody's, said that the region’s banking sector - which consists of 118 banks – is showing "substantial improvement" in profits and performance with respect to the global financial and economic crisis in 2008 and 2009.