Panama Information

Banking, Insurance and Stock Market

Banking

The Banking centre represents more than three times panama's GDP

Banking system assets on a non consolidated basis were 39.6 billion
consolidated were 45.8 end-march 2006

At end–March 2006, there were 73 banks, including 2 state-owned banks,37 general license private banks, and 34 international license banks.

Financial intermediation contributed 1.32 billions, 11.6 percent of GDP in 2006.

Stock Market in Panama

For 2004, the total market capitalization was $3.9 billion, which represents an
increase of 28 percent over 2003. The proportion of market capitalization represented by
that of the three largest companies averaged 58 percent. There were 81 issuers of listed
securities in the capital markets at end 2004, representing a decline of 15 during the year due
to mergers, or withdrawals of issues because they were cancelled before maturity. In 2005,
the number of issuers increased only slightly to 83.

Primary issues are the largest component of the market activity by volume at
about 68 percent, while the secondary market represents about 25 percent and the
repurchases about 6 percent. The total amount of securities issued in 2004 was $518 million
with an additional $460 million issued through end-May 2005. For the first five months of
2005, the pace of issuance is substantially ahead of 2004. There are 17 mutual funds
(domestic) and 3 international collective investment schemes with total assets of $422
million and $20 million, respectively.

There are 33 securities houses registered with a total transaction volume of about $7.3 billion in 2004.
About 55 percent of transaction volume was concentrated in five securities houses. Interest
in Panama's capital markets is expanding. The  National Values Commission (CNV) licensed three securities houses in
2004. In 2005, five firms applied to obtain licenses to operate as securities houses, and one
firm applied to obtain an investment advisor license. The interest in the securities industry, has also increased consistently among individuals that have obtained CNV licenses in a personal capacity. At end-May 2005, there were 265 licensed stockbrokers. The CNV licensed 50 stockbrokers in 2003, 38 in 2004, and 42 up to end-May 2005. 

Insurance

Insurance penetration in the economy measured as premiums subscribed to
GDP is around three percent (see Table 2). The total premiums subscribed in 2005 were
$430 million, up a modest 1.9 percent from 2004. The dominant share of insurance
underwriting is in the local market. Total assets for 2004 were $765 million (around five
percent of GDP), with investments representing 69 percent of total assets. Life insurance
business represented 35 percent of the total market. Within the nonlife insurance business,
automobile insurance and health insurance are the two largest categories, representing
respectively 16 and 17 percent of total premium subscriptions. The insurance market is
highly concentrated with the five largest companies accounting for around 74 percent of the
market.

There are 18 authorized insurance companies. Of these, four specialize in the life
business, one in surety business and 13 operate both life and nonlife insurance. Nine of the
life/nonlife companies also have a license to operate reinsurance and a further five companies
are authorized to operate exclusively in reinsurance. In 2003, premiums issued by reinsurers
represented 11 percent of the premiums issued by insurers. Of the 18 insurance companies,
five are subsidiaries of foreign firms and four are affiliates of local banks. The captive
insurance sector is immaterial, and no data are available.
C. Financial Soundness Indicators for the Banking System

The favorable economic climate allowed the banking system to return to growth
starting in 2004. Bank balance sheets grew 7 percent in 2004, about 12 percent in 2005, and
10 percent (annualized) in the first quarter 2006. This contrasts with several years prior to
2004, where growth was either negative or low. The primary contributor to growth has been
increased lending in the local market—primarily mortgages and consumer credit, which has
been funded by increased deposits, retained earnings, and new capital.

Liquidity remains stable, although loan growth has resulted in some decline in
liquid assets. Liquid assets to total deposits were 24 percent, and loans represent a
conservative 59 percent of assets and 84 percent of deposits at end-March 2006. The banks
and banking system have remained well-capitalized. At end-March 2006, system
regulatory capital (Basel I rule) was a strong 17.2 percent. The private Panamanian owned
banks report 14.7 percent regulatory capital, which remains well above the 8 percent
regulatory minimum requirement. Equity to assets as a measure of capital adequacy for the
system was a strong 12.9 percent.


There are 18 authorized insurance companies. Of these, four specialize in the life
business, one in surety business and 13 operate both life and nonlife insurance. Nine of the
life/nonlife companies also have a license to operate reinsurance and a further five companies
are authorized to operate exclusively in reinsurance. In 2003, premiums issued by reinsurers
represented 11 percent of the premiums issued by insurers. Of the 18 insurance companies,
five are subsidiaries of foreign firms and four are affiliates of local banks. The captive
insurance sector is immaterial, and no data are available.

Real Estate

This activity enhanced 5.3 %, explained by the raise of the production of the market and homes properties, due to the offers of the residential, apartments, villages, etc. Specially for foreigner buyers.

Construction increased 17.4%, Real Estate market has a remarkable development, due to important investment and notorious people conducting business or purchasing properties in Panama.

Standard/Cost of Living

Panama has considered by some business survey as one of the best countries to live. Its proximity, low crime rate, entertainment environment, cost of living and legal system, makes Panama a paradise in every aspect. Panama has one of the lowest inflation in the world. A salary US$800 will be enough to a retire person to live with some commodities.