A few months before the expiration of the law that establishes a moratorium on loans granted by banks, cooperatives and public and private financial institutions in Panama, the banking sector expects that these benefits will not be extended.
As a result of the changes made by the Assembly in Panama regarding the total payment of the resources placed on deposit in cases where the banks are in the process of liquidation, the Banking Association is asking for the construction of consensual public policies.
The plenary session of the Assembly, after correcting the formulations made to the document by the Executive, passed in third debate Project 308, which adds provisions to Decree Law 9 of 1998 on the Banking System in Panama, the legislative body informed last September 30.
After President Cortizo partially banned the moratorium bill, the National Assembly discussed the initiative in a second debate, which was unnecessary for the Superintendent of Banks, who said that the banks had already implemented the necessary measures.
Despite the fact that on May 4 President Laurentino Cortizo and the representative of the Panamanian Banking Association, Aimee de Grimaldo, signed an agreement to extend the moratorium until December 31, 2020 due to the economic crisis caused by covid-19, the deputies declared themselves in permanent session to discuss the moratorium project (already banned by the president) in second debate in extraordinary sessions from June 15 to 18.
Legal or natural persons who apply for the moratorium on loan payments in Panama must prove to the banking institutions that they have been economically affected by the outbreak of covid-19 and that they cannot cancel their quotas.
The Executive and the banking sector agreed to extend until December 31st of this year the moratorium on credit payments, a measure that applies to mortgages, personal loans, the agricultural sector, commercial, transportation, auto and credit cards.
The government also reported that in the context of the covid-19 outbreak, President Cortizo sanctioned Bill 295 which adopts special social measures for the temporary suspension of payment of public services such as electricity, fixed and mobile telephony and Internet.
As a result of the economic effects that the outbreak of covid-19 will cause in the National Assembly, a general suspension of the payment of taxes, basic services and bank credits for three months is proposed, but the businessmen think that it is not suitable to generalize the measures.
Bill No. 390, which proposes the suspension of payments and collections of taxes, social security contributions, mortgage loans, commercial and agricultural loans, is advancing in the National Assembly.
After the country was put back on the FATF grey list, the private sector believes that investments will be driven away and economic growth will face multiple obstacles.
After the Financial Action Task Force (FATF) decided to include the country in the list of nations that need to be supervised in the process of implementing measures to prevent money laundering and the financing of terrorism, entrepreneurs from different sectors foresee that the effects will be negative for the local economy.
From May 2019, foreign customers will have to declare to local system banks that their funds meet their country's tax requirements.
The Superintendence of Banks of Panama (SBP) approved Agreement 02-2019, which implements the recommendations of the Financial Action Task Force, which consists of expanding the required due diligence measures of banks with their customers.
Because of the hike in interest rates in the United States, several banks in Panama are already increasing mortgage rates by between 0.25% and 0.50%.
According to representatives of the Banking Association of Panama (ABP), the increase in mortgage loans is mainly due to the upward adjustment that interest rates are experiencing worldwide, which will affect the Panamanian market in the short and medium term.
In response to a request put forward by the banking association, the government has decided to eliminate from the banking modernization bill the proposal to modify the banking license scheme.
The initial proposal by the Executive Power was to replace the current system of banking licenses with another with a single license, and the regulator would supervise each bank depending on the type of activity.
Representatives of the banking guild say that since the reestablishment of diplomatic relations, banks in the Asian country have expressed interest in the Panamanian market.
Although the conditions and legal framework in which correspondents of large international banks operate in the country still need to be improved, representatives from the banking sector believe that the arrival of Chinese financial companies would help accelerate this process of improvement.
Although it was expected to happen this year, the legislation that standardizes the issuance and circulation of checks will enter into force in February 2016.
The Superintendency of Banks in Panama, working in conjunction with the rules on banking union, announced that the new rules will come into effect in February 2016, and the checks that have been issued before this will have a period of 18 months after the entry into force of the new standard to be taken out of circulation.
In April this year the mortgage loan portfolio of the banking system amounted to $12 billion, 15% more than in the same month in 2014.
The growing demand for homes in Panama is the main factor behind the steady growth in mortgage lending, which is expected to continue rising due to the deficit that still exists in the availability of housing.
The growth in the portfolio between April 2014 and March of this year was $1.545 billion.
"It is imperative that banks have the necessary controls that enable them to timely detect suspicious money laundering activities."
The new president of the Banking Association of Panama (ABP) is proposing the creation and implementation of a Code of Conduct for unionized entities, similar to what exists for other banking associations in the region.
Banks struggling to keep their correspondents and restrictions for Panamanian companies in the external financial market, are some of the consequences of being on the FATF's gray list.
The Panamanian government expects to submit, within the next month, a bill to prevent money laundering and terrorist financing, which seeks to control the vast majority of economic activities by requiring additional controls to those which do not have increased supervision. With this measure they hope to get off the gray list and meet the deadline set by the Financial Action Group, which expires in June.
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