Banking Law in Panama

Panama Banks
Posted: August 1, 2019
Last Update: September 18, 2019

Banking Law

The Republic of Panama has a robust and world-class banking center with more than 100 local and foreign banks operating under different types of licenses.

It is important to note that the banking sector in Panama is a regulated business, i.e. which by law must meet certain parameters to practice as such.

Bank regulation is somewhat complex and has been legislated through several laws passed in different moments in time. Law 2 of February 22, 2008 seeks to establish a text run where regroups all modifications and / or regulation of the banking sector in one whole document.

Panama Banks has enlisted the most important aspects of Panamanian Banking Law as follow.

Liquidity Requirements

All Banks must maintain, at all times, a minimum balance of liquid assets equivalent to the percentage of the gross total of their deposits to be determined periodically by the Superintendency. This percentage shall not exceed thirty five percent (35%) and until the Superintendency decides otherwise, that percentage will be thirty percent (30%).

ALL BANKS MUST MAINTAIN A MINIMUM BALANCE OF LIQUID ASSETS EQUIVALENT TO 30%

BANKING LAW

In calculating the liquidity percentage, deposits banks’ made by their home office or a branch, subsidiary or affiliate outside of the national territory will be excluded from the calculation of total gross deposits.

Banking Supervision

All banks that engage in banking business in the Republic of Panama, are subject to inspection and supervision of the Superintendence to confirm their financial stability and structure of compliance with the provisions of the Banking Law.

ALL BANKS ARE SUBJECT TO INSPECTION AND SUPERVISION

BANKING LAW

Banking License

No one may engage in the banking business in or from the Republic of Panama without the corresponding banking license or without having been duly authorized by law.

Three types of licenses can be issued:

GENERAL LICENSE BANK

That allows the licensee to engage in the banking business in the Panamanian territory (Republic of Panama), as well as to carry out transactions that are concluded, consummated or have effect abroad the Panamanian territory (Republic of Panama), and undertake whatever other activities allowed by Banks Authority.

INTERNATIONAL LICENSE BANK

That allows the licensee to engage in, from an office established in Panama, transactions that are concluded, consummated or have effect abroad (outside the territory of the Republic of Panama), and undertake whatever other activities allowed by Banks Authority.

LICENSE FOR BANK OFFICE REPRESENTATION

That allows licensed foreign banks to establish a representation office in the Republic of Panama and undertake whatever other activities allowed by Banks Authority. Representation offices must always include the expression “Representative Office” in all of their operations.

A representation license has to be requested directly by the bank to be represented and may only be granted to it. Once granted, the bank may engage in representation activities through a branch or a wholly owned subsidiary.

In Panama, there are three types of Banking License:
1. General License: Doing business In & Outside Panama;
2. International License: Doing business Outside Panama;
3. Representation Office: Foreign Bank with an office in Panama.

BANKING LAW