Latin Finance - July 2008 - (Page 35)

panama money flows Still, Venezuela, Ecuador and Colombia together accounted for the largest surge in deposits, of $2.70 billion in the four years to the end of 2007. Venezuela’s Plan B The flow of funds from the Andes is not spread evenly among all banks in Panama. Foreign deposits grew by 42% last year at foreign private banks with general banking licenses, while deposits from overseas at banks with international licenses fell by 31%. This is because only general license banks can provide financing for projects inside Panama, such as real estate investments, which have been attractive, for example, to Venezuelan investors. General license banks which saw the largest increase in foreign deposits are Banesco – which probably accounted for the bulk of the flow from Venezuela – and Ecuador’s Banco del Pichincha and Produbank. But foreign funds have also flowed to BBVA, HSBC, BNP Paribas, Stanford Bank, St. Georges Bank, and Banco Uno. Only a few Panamanian general license banks saw increases in foreign deposits – Multicredit, Global and General – but most saw foreign deposits remain unchanged. Banesco is counting on expansion into Central America from Panama as the key to future growth. As banking rules tighten in Venezuela, other banks are also moving to Panama, such as Banco Mercantil. “The Venezuelan financial system has chosen Panama as a Plan B,” says a Caracas-based broker. While some foreign international licensed banks in Panama saw a decline in foreign deposits last year, others bucked the trend, such as Colombia’s Bancolombia and Banco de Bogotá, Peru’s Banco de Crédito del Perú, and Ecuador’s Banco del Pacífico. Total deposits in the Panama banking system reached $40.1 billion last year, an increase of 70% in four years, yet the total lending portfolio increased by 92% over the same period, to reach $33.4 billion last year. Trade financing out of Panama has grown faster than other areas of lending, especially from banks like Banco de Crédito del Perú and Bancolombia, directed towards South America. Foreign deposits are an important feature on bank balance sheets because credit demand has grown from both the fast growing domestic economy and at an even faster pace from trade finance. But experts say these banks have not yet needed to securitize the surge in the flow of capital from abroad. Still, the longer-term trend shows that while Panama remains a key and growing international banking center, the foreign inflows are being gradually eclipsed by progress locally. Overseas deposits as a proportion of total deposits in the Panama banking system averaged around 80% in the 1970s and 1980s, but dropped below 50% in 2000, and have since then averaged about 43% – a level maintained last year. LF July/August 2008 LATINFINANCE 35 http://www.abg.org.gt/clab2008 http://www.abg.org.gt/clab2008 http://www.abg.org.gt/clab2008

Table of Contents Feed for the Digital Edition of Latin Finance - July 2008

Latin Finance - July 2008 Contents Investment Banking Outlook Compensation Survey Colombia Investment Banking Borrowers vs. Investors Banorte Profile Braskem Financing Strategy Brazil Hydro Finance Peru Port Privatization Panama Money Flows Argentina Local Markets Guide to Banking Technology Who Said That?

Latin Finance - July 2008

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