In response to the summon received at the end of February 2021, the Superintendent of Banks of Panama, Amauri A. Castillo, appeared before the plenary session of the National Assembly to answer the questionnaire sent by the Honorable Parliamentarians on some topics related to the role of the Superintendency of Banks of Panama (SBP), the situation of the banking system, the subsidies, among others.
During his appearance, the Superintendent informed the parliamentarians and the general public that the banking system has good liquidity that amounts to 65% and a sound capital adequacy (solvency) of 15.7%, ratios that are almost double of that required by the banking law, which has historically been a sign of financial prudence in the system.
However, the financial results for 2020 were not the best in terms of profitability, as the profits of the International Banking Center plummeted to USD 839 million
or 45% less, “the banking system is not immune to the difficulties and challenges that our economy is experiencing, and the figures show that.”
In regards to provisions, Mr. Castillo said that “given the uncertainty triggered by this economic crisis, the banking system and our regulations foresaw that banks would increase their provisions for potential losses to USD 2.11 billion.
Regarding the establishment of interest rates caps or limits, he pointed out that it would be detrimental to the stability of the financial system and the protection of depositors’ savings, and would lead to financial exclusion, mainly for small consumers and micro and small companies.
Concerning the past payment standstill law, he commented that it is more effective to be able to make modifications to the terms and conditions of a loan, depending on the reality of each client, instead of taking a “one size fits all” measure that is not always going to benefit the situation of each debtor.
As for the questions about the subsidies that benefit banks, he stressed that these [subsidies] are directed to borrowers, not to banks. For instance, in the case of preferential interest loans, it is a subsidy provided to families so that they can easily access loans and purchase a new home, which should be their main home. As of December 2020, the quantity of preferential mortgages benefited 120,737 Panamanians.
Relating to the subsidy of the Special Interest Compensation Fund (FECI) regime, this is aimed at producers of qualified agricultural loans.
About the client-bank relationship, the Superintendent remarked that between 2018 and 2020, the Claims Management Systems of banks managed a total of 50,747 claims and, for that same period, the SBP’s Bank Customer Service Department received a total of 1,588 complaints, which means that only 3% of the complaints or disagreements of bank consumers escalate to an administrative process before the Superintendency of Banks, since the quantity of complaints received by banks between 2018 and 2020 show that 97% of the claims were effectively managed by the Claims Management Systems of banks themselves, in accordance with the provisions of the Banking Law and the Rule 1-2008.
Mr. Castillo made reference to Rule 1-2011, recalling the obligation of banks to be transparent in the dissemination, application and modification of interest rates, commissions or charges, surcharges, charges for third-party accounts and any other fee they offer and set, as well as the services they render, and that noncompliance by banks, in regards to the guidelines for information transparency, is sanctioned in accordance with the provisions of Title IV of the Banking Law.
He referred also to the Financial Education campaign led by the Superintendency of Banks and sponsored by the German Savings Banks Foundation for International Cooperation (Sparkassenstiftung für internationale Kooperation e.V) “in 2021 we have committed ourselves to lead an enterprise with the support of the Ministry of Education, among other institutions, to formally establish the National Strategy for Financial Education (ENEF).”
