Panama Bank Accounts

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1.1 Licensing authority                                                                           The Superintendent of Banks

1.2 Number of banks                                                                               84
1.3 Minimum capital entry requirement                                                             US$ 10
1.4 Is information on source of funds for capital required?                                       yes

1.5 Are the sources of funds to be used as capital verified by                                    yes
1.5.1 Are law enforcement authorities consulted?                                                  yes
1.6 Can assets other than cash/govt. securities be used to                                        yes
increase capital?
1.7 Can borrowed funds be used?                                                                   no
1.8 Legal submissions required for banking license:              1.8.1 Draft by-laws              yes
                                                                 1.8.2 Intended organization      yes
                                                                 1.8.3 First 3-year financial     yes
                                                                 1.8.4 Financial information on   yes
                                                                 1.8.5 Background/experience      yes
                                                                 of future directors

                                                                 1.8.6 Background/experience      yes
                                                                 of future managers

                                                                 1.8.7 Sources of funds in        yes
                                                                 capitalization of new bank
                                                                 1.8.8 Intended market            yes
                                                                 differentiation of new bank
1.9 Number of domestic applications for banking licenses                                          5

1.9.1 Number denied                                                                               0
1.10 Number of foreign applications for banking licenses                                          12
1.10.1 Number denied                                                                              1
1.11 Basis for denial of appilications                           1.11.1 Capital amount/quality    yes

                                                                 1.11.2 Banking skills            yes
                                                                 1.11.3 Reputation                no
                                                                 1.11.4 Incomplete application    no

2.1 Is there a maximum percentage of capital that can be                                          no
owned by single owner?
2.1.1 If yes, what is it?
2.2 Can related parties own capital in a bank?                                                    yes
2.2.1 If yes, what is the maximum percentage?                                                     none
2.3 Regulatory restrictiveness of ownership by nonfinancial                                       unrestricted
firms of banks
2.4 Fraction of capital in 10 largest banks owned by                                              80%
2.5 Can non-bank financial firms own shares in banks?                                             yes
2.5.1 What are the limits?                                                                        none
2.6 What is the 5-bank concentration ratio (%)?                                                   30.4
3.1 Minimum capital-asset ratio requirement (%)                                               8
3.1.1 Is it risk-weighted in line with Basle guidelines?                                      yes
3.2 Does the ratio vary with a bank's credit risk?                                            no
3.3 Does the ratio vary with market risk?                                                     no
3.4 Actual risk-adjusted capital ratio (%)                                                    10.8
3.5 Is subordinated debt allowable (required) as part of                                      yes
3.6 What fraction of revaluation gains is allowed as part of                                  100%
3.7 Percentage of banking system's assets in banks that are                                   11.56
50% or more government owned
3.8 Percentage of banking system's assets in banks that are                                   38.33
50% or more foreign owned
3.9 Before minimum capital adequacy is determined, which        3.9.1 Market value of loan    no
items are deducted from capital                                 losses
                                                                3.9.2 Unrealized securities   no
                                                                3.9.3 Unrealized foreign      yes
                                                                exchange losses
4.1 Securities                                                                                unrestricted
4.2 Insurance                                                                                 permitted
4.3 Real estate                                                                               restricted
4.4 Regulatory restrictiveness of bank ownership of                                           permitted
nonfinancial firms
5 & 6 -audit,management,org
5.1 Is an external audit compulsory?                                                          yes
5.2 Are there specific requirements for the extent of audit ?                                 yes

5.3 Are auditors licensed or certified?                                                       yes
5.4 Is auditor's report given to supervisory agency?                                          yes
5.5 Can supervisors meet external auditors to discuss report                                  yes
without bank approval?
5.6 Are auditors legally required to report misconduct by                                     no
managers/directors to supervisory agency?
5.7 Can legal action against external auditors be taken by                                    yes
supervisor for negligence?
5.8 Has legal action been taken against an auditor in last 5                                  no
6.1 Can supervisors force banks to change internal                                            yes
organizational structure?
6.2 Has this power been utilized in last 5 years?                                             no
7.1 Are there guidelines for asset diversification?                                           no
7.2 Are banks prohibited from making loans abroad?                                            no
7.3 Minimum liquidity requirement (%)                                                         30%
7.4 What interest is paid on reserves?                                                        With the exception of cash, all
                                                                                              assets used for satisfying
                                                                                              liquidity requirement may earn

Minimum reserve requirement (%)                                                               none
How is reserve requiremement renumerated
7.5 What assets satisfy liquidity or reserve requirements?                           Domestic: gold or curency of
                                                                                     legal tender in Panama, net
                                                                                     balances in Clearing House,
                                                                                     net balances in banks in
                                                                                     Panama pyable withing 186
                                                                                     days, T-Bills and other
                                                                                     securities issued by the state,
                                                                                     securities issued by local
                                                                                     companies or guarantee by
                                                                                     banks in Panama, installments
                                                                                     of obligations payable within
                                                                                     186 days. Foreign: Net
                                                                                     balances in foreign banks
                                                                                     payable within 186 days,
                                                                                     securities issued by foreign
                                                                                     governments or international
                                                                                     institutions, securities issued
                                                                                     by foreign companies payable
                                                                                     within 186 days

8.1 Is there an explicit deposit insurance scheme?                                   no
8.1.1 Is it funded by the government, banks or both?
8.1.2 Ratio of accummulated funds to total bank assets
8.1.3 Insurance limit per account
8.1.4 Is there a limit per person? Amount of limit
8.1.5 Does deposit insurance authority make the decision to
intervene a bank?
8.1.6 If no, who does?
8.1.7 If yes, does the deposit insurance authority have the
legal power to intervene/takeover a troubled (not insolvent)
8.2 As a share of total assets, value of denominated debt                            0
liabilities not covered by explict/implicit savings protection
8.3 Number of banks merged/closed (as part of failure                                1 closed
resolution) in last 5 years
8.4 Were depositors wholly compensated the last time a bank                          no
8.4.1 Average time to pay depositors in full                                         Information unavailable
8.4.2 Longest that depositors waited in last 5 years                                 Information unavailable
8.5 Were any deposits that were not covered at the time of
failure compensated when bank failed?
8.6 Can deposit insurance agency take legal action against
bank directors/officials?
8.7 Has the deposit insurance agency ever taken any legal
action against bank directors/officials?
9.1 Is there a formal definition of "non-performing loan"?                           yes
9.1.1 If yes, what is it?                                                            If loans are 30 days in arrears
                                                                                     for single payment debts; 90
                                                                                     days in arrears for installments

9.2 Classification of loans in arrears:                          9.2.1 Substandard
                                                                 9.2.2 Doubtful
                                                                    9.2.3 Loss
9.3 Minimum required provisioning of loans as they become:          9.3.1 substandard           not required

                                                                    9.3.2 doubtful              50%, minus collateral
                                                                    9.3.3 loss                  100, minus collateral
9.4 Other classification systems                                                                The superintendency is
                                                                                                currently evaluating a
                                                                                                regulation on criteria for loan
9.5 Ratio of non-performing loans to total assets (%)                                           0.0268
9.6 If one loan is non-performing, are other loans of a multiple-                               no
loan customer classified as non-performing?
10.1 Does income statement contain accrued but unpaid                                           yes
interest/principal while loan is performing?
10.1.1 Does income statement contain accrued but unpaid                                         no
interest/principal while loan is non-performing?
10.2 Number of days in arrears after which interest income                                      90
cease to accrue
10.3 Are consolidated accounts covering bank and any non-                                       yes
bank financial subsidiaries required?
10.4 Are off-balance sheet items disclosed to supervisors?                                      yes

10.4.1 Are off-balance sheet items disclosed to public?                                         yes
10.5 Must banks disclose risk management procedures to                                          no
10.6 Are directors legally liable for erroneous/misleading                                      yes
10.6.1 Have penalties been enforced?                                                            no
10.7 Do regulations require credit ratings for commercial                                       no
10.7.1 What percentage of top ten banks is rated by
international credit rating agencies?
10.7.2 What percentage of the top ten banks are rated by
domestic credit rating agencies?
10.7.3 Which bank activities are rated?                    bonds              yes
                                                           commercial paper   yes
                                                           other              no
11.1 Are there any mechanisms of cease-desist type orders                                       no
whose infraction leads to automatic imposition of civil & penal
sanctions on banks directors & managers?
11.2 Can the supervisory agency order directors/management                                      yes
to constitute provisions to cover actual/potential losses?

11.3 Can the supervisory agency suspend director's decision         11.3.1 dividends            yes
to distribute:
                                                                    11.3.2 bonuses              yes
                                                                    11.3.3 management fees      yes
11.4 Any such actions taken in last 5 years?                                                    yes
11.5 Which laws address bank insolvency?                                                        Decree Law no. 9 of February
                                                                                                26, 1998
11.6 Can the supervisory agency supercede bank shareholder                                      yes
rights and declare bank insolvent?
11.7 Does banking law allow supervisoy agency to suspend                                        yes
some or all ownership rights of a problem bank?
11.8 Does the law establish pre-determined levels of solvency                                      no
deterioration which forces automatic actions such as
11.9 Regarding bank restructuring & reorganization, can         11.9.1 supercede shareholder yes
supervisory agency or any other govt. agency do the             rights
                                                                11.9.2 remove and replace          yes
                                                                11.9.3 remove and replace          yes
                                                                11.9.4 forbear certain             yes
                                                                prudential regulations
                                                                11.9.5 insure liabilities beyond   no
                                                                any explicit deposit insurance
11.10 Number of banks closed in last 5 years                                                       1 (in 1995)
11.10.1 Percentage of total bank assets accounted for by                                           0.004
these banks
12.1 Bank Supervision Authority                                                                    The Superintendency of Banks

12.1.1 Is there more than one supervisory body?                                                    no
12.2 To whom are supervisors accountable?                                                          The Superintendency of Banks
                                                                                                   is not responsible or
                                                                                                   accountable to any other entity

12.2.1 How is head of supervisory agency/other directors                                           Appointed by the President
12.2.2 How is head of supervisory agency/other directors                                           Only the Administrative
removed?                                                                                           Chamber of the Supreme
                                                                                                   Court of Justice may remove
                                                                                                   the Superintendent or
                                                                                                   Directors, on the basis of the
                                                                                                   causes provided in the
                                                                                                   Banking Law
12.3 Any important differences between expectations from                                           none
supervisory agency and what is mandated by law?

12.4 Total number of professional bank supervisors                                                 51
 12.4.1 Number of professional bank supervisors per                                                0.61
12.5 Numbe of onsite examinations per bank in last 5 years                                         0.7

12.6 Total budget for supervision                                                                  US$ 4.2 (1999)
12.7 Frequency of onsite inspections conducted in large &                                          2
medium size banks (annually=1; every two years =2)
12.8 Average tenure of a supervisor (years)                                                        10
12.9 frequency of supervisors employed by banking industry                                         2
subsequent to retirement (never=0, rarely=1, occasionally=2;
12.10 Must infraction of any prudential regulation found by a                                      yes
supervisor be reported?
12.11 Any mandatory actions in these cases?                                                        no
12.12 Who authorizes exceptions to such actions?                                                   The Superintendent of Banks

12.13 Number of exceptions granted last year                                                       0
12.14 Are supervisors legally liable for their actions?                                            yes

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