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A bit of Panama Banking History
The banking panorama in Panama changed forever in mid 2006 with the merger of international giant HSBC and local bank Banistmo. On July 20, 2006 HSBC bought Banistmo for $1.77 billion. The negotiation for this buyout took over one year while HSBC reviewed Banistmo's operation. At that time HSBC had presence in 90 countries and was looking to grow in the Panamanian market. With this move HSBC became the only megabank in the Panamanian market.
Five months later, at the beginning of 2007 Panamanian businessmen: Federico Humbert and Stanley Motta made the announcement that they had decided to join forces in order to face this new megabank. They had decided to merge Banco General and Banco Continental because they wanted to remain a Panamanian bank but be big enough to to face the new competition.
In 2007 Citibank bought Grupo Financiero Uno and Banco Cuscatlan in order to gain greater presence in the market.
The actual mergers of HSBC and Banistmo took a while. Banistmo remained in operation until April 2009 when the Banistmo brand finally disappeared and they were complete integrated. The delay the process was mainly attributed to the differences in their technological systems, however HSBC has recently stated that now they are 100% ready to make the banking market feel their presence.
Banco General and Banco Continental had a shorter merger period as they completed their merger within five months. It was a challenge mostly in terms of the culture of the two banks as well as their technological systems. Currently there are branches of Banco General one in front of the other. This is a product of the merger between the two however they have no plans to close any of the branches as their volume of clients is big enough to accommodate these branches. They are in fact establishing new branches in high growth areas such as 24 de diciembre.
After the merger HSBC controlled 22.6% of the local market while Banco General had 13.2% and Banco Continental 10.8%. After the Banco General and Banco Continental merger, the surviving brand, Banco General controlled 24% of the market. At the end of 2007 when all three mergers were official the Panama banking pie was divided as follows: the three megabanks had 41% of the assets, 48.6% of the market and generated 33.3% of the revenue for 2007.
Today, after four years and the worst of the crisis is over, HSBC has 17% of the assets and 16% of the market; Banco General has 14.8% of the assets and 20.1% of the market while Citibank Panama and Citibank NA have 4% of the market. Jointly these three entities control 35.9% of the assets and 39.5% of the market. Overall Banco General is in first place in terms of market share as well as in revenues.
Not only local banks are growing; in fact these strong figures are attracting foreign banks. In 2010 this interest has grown quite strongly. To date seven new banks have been established, another four applications were submitted recently and three applications are being evaluated. Both in 2009 and 2008 only three new banks were established each year.
The applications being processed are a general license for Allbank Corp of Venezuelan capital, and an international license each for Multibank Internacional of Panamanian capital and Ficohsa of Honduran capital. Four of the new banks established got a general license to operate in Panama, two banks changed their license and one obtained an international license.
Copyright© 2011, Pan Am Publishing S.A., Republic of Panama