STABILITY CONCERNS

Panama’s banking system said safe

03-02-2009 | TAGNIA SHOCRON/MARIJULIA PUJOL

mpujolstar@laestrella.com.pa

More people are taking out their money from banks as they begin to lose confidence in Panamanian financial institutions

Panama Star PANAMA. The Panamanian banking system appears to be solid, but rumors about the financial global crisis and fraud scandals like the one that provoked the temporary closure of Stanford Bank are taking their toll.

A number of deposit holders have taken their savings from their bank, although the Panama Bank Superintendent has tried to put their minds at rest and assure them that their fears are unfounded, because the banks with general licenses have liquidity above what the law establishes.

The Bank Superintendent said that all the Panamanian banks maintain stable operations with an average liquidity level of 61.2 percent, which is far higher than the 30 percent set up in the statute.

Certain financial institutions such as the Banco General, have been affected by the negativity in the air and account holders have pulled out more money than usual over the last few days.

The Panama Bank Superintendent, Olegario Barrelier, giving declarations from the United States, after receiving e-mail and phone calls from all over the world, said emphatically that no Panamanian bank is at risk of becoming insolvent or is under suspicion.

Barrelier said that it was a worrying situation, because the Bank Superintendent has issued a number of press releases to calm down the account holders, but the releases have had no effect whatsoever.

The Superintendent reiterated emphatically that no general license bank is operating in Panama without liquidity or solvency, which would urge that institution to take over the administrative control of it, as happened with the Stanford Bank.

The US based Stanford bank was taken under administration by the Bank Superintendent, after its principal shareholder Alan Stanford, was arrested on fraud charges by the U.S. authorities. As a result its two branches in Panama were closed, its operations suspended and the deposit holders saw their accounts frozen overnight.

The case generated a lot of uncertainty among the general public and businesses, afraid of being caught in a similar type of situation in the future.

The message of the Bank Superintendent is to be prudent and cautious about unfounded rumors, which can bring as a consequence a total lack of trust in the Panamanian banking system.