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07/08/12
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WESTERN HEMISPHERE CREDIT AND LOAN REPORTING INITIATIVE
CENTER FOR LATIN AMERICAN MONETARY STUDIES
FIRST INITIATIVE
THE WORLD BANK
CREDIT AND LOAN REPORTING
SYSTEMS IN PANAMA
C
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CMY
K
www.whcri.org
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REPORT PANAMA
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estern
emisphere
2011
WESTERN HEMISPHERE CREDIT
AND LOAN REPORTING INITIATIVE
WESTERN HEMISPHERE CREDIT
AND LOAN REPORTING INITIATIVE
Credit and Loan Reporting Systems
in Panama
2011
CENTER FOR LATIN AMERICAN MONETARY STUDIES
FIRST INITIATIVE
THE WORLD BANK
First English Edition, 2011
Published also in Spanish
All rights reserved
© Centro de Estudios Monetarios Latinoamericanos, 2011
Durango 54, México D. F., 06700
ISBN 978-607-7734-34-5
Printed and made in México
Impreso y hecho en México
The opinions expressed in this paper are those of the authors and do not necessarily coincide with
the position of the Center for Latin American Monetary Studies (CEMLA), FIRST Initiative or the
World Bank. The authors are solely responsible for any errors of omission or commission.
Foreword
In August 2004, following a request from the central banks of Latin America and the
Caribbean, the World Bank and the Centro de Estudios Monetarios Latinoamericanos
(CEMLA), with the financial support of the FIRST Initiative, launched the Western
Hemisphere Credit and Loan Reporting Initiative (WHCRI). The objective of the Initiative is to describe and assess the credit and loan reporting systems of the Western Hemisphere with a view to identifying possible improvements in their efficiency and integrity.
As part of the project structure, in August 2004 an International Consultative Committee (ICC) comprised of experts in various fields was established. In addition to CEMLA
and the World Bank, the institutions participating in the ICC include multilateral institutions such as the Inter-American Development Bank (IADB), the International Finance Corporation (IFC) and the International Monetary Fund (IMF) and central
banks such as the Bank of Canada, Banco de España and the Federal Reserve Bank of
New York. To assure quality and effectiveness, the Initiative includes two important
components. First, all studies are conducted with the active participation of country officials and the project builds upon the existing work undertaken in the respective country. Second, the Initiative draws upon international and national expertise on the subject, through the ICC, in order to provide guidance, advice and alternatives to current
practice. The Initiative has undertaken a number of activities in response to requests by
central banks from Latin America and the Caribbean. These include: the preparation of
public reports containing a systematic in-depth description of each country’s credit and
loan reporting systems; the delivery of a confidential recommendations report to the
authorities of each country; the organization of ICC meetings to review country studies
and provide input for future work; the organization of workshops focusing on topics of
specific interest; the creation of a web page (www.whcri.org) to present the Initiative’s
products and other information of interest in the field of credit reporting; and the
promotion of working groups to ensure continuity in project activities.
CEMLA acts as the Technical Secretariat of the Initiative, with the main objective of
making this process sustainable and extending activities to all countries within the
Hemisphere. To this end, the Initiative has helped strengthen CEMLA’s in-house expertise and broadened knowledge and the transfer of know-how across the Region.
The efforts of the Working Groups coordinated by CEMLA shall maintain the structure created under the Initiative and will provide a permanent forum for the countries
in the Region to discuss, coordinate and lend a collective impetus to work in the field
of bank credit and loan reporting systems.
This report, Credit and Loan Reporting Systems in Panama, is one of the public documents
in the series and it has been prepared by a multinational team in collaboration with
representatives from the Ministerio de Economía y Finanzas.
Javier Guzmán Calafell
Director General
CEMLA
Pamela Cox
Vicepresident, ALC
World Bank
Janamitra Devan
Vicepresident, Private
and Financial Sector
World Bank
vii
Acknowledgements
This report is based on the findings of a mission which visited Asuncion in May
2010. The report was prepared by members of an international team that included
Corina Arteche Serra, Jane Hwang and Fredes Montes (World Bank), Matías
Gutiérrez Girault (Consultant) and Raúl Morales (CEMLA).
The multinational team worked in cooperation with the local team comprised of
staff from the Ministerio de Economía y Finanzas (MEF, ministry of economy and
finance) and the Superintendencia de Bancos de Panamá (SBP, superintendency
of banks of Panama).
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Table of Contents
Page
1. ECONOMIC AND FINANCIAL MARKETS BACKGROUND ..…………..…….……….
1
1.1 Main Reforms in Recent Years …………..…………………………………………….…….
3
1.2 Banking Sector …………………………………………………………………………..………..
4
1.2.1 Recent Reforms …………….…………………………………………………..…………..
4
1.2.2 Current Structure …………….………………………………………..…………………..
5
1.3 Other Major Credit-Granting Institutions in the Financial and Non-financial
Sector ………………………………………………………………….…………..………..……...
7
1.3.1 Leasing Companies ...………………………………………………………….…………..
7
1.3.2 Other Non-Bank Financial Firms ..…………………………………………..………..
8
1.4 The Current Credit Market ……………………………...…………………………..……….
8
1.4.1 Key Issues in Business Finance ……………………………………………..…………..
10
1.4.2 Key Issues in Consumer Finance …………………………………………..…………..
10
1.5 Major Trends in Credit Reporting ……………………………..……………………………
10
2. INSTITUTIONAL ASPECTS ……………..…………………………………...…………………..
12
2.1 Legal Framework ………….……..……..………………………………………………………..
12
2.1.1 Privacy ……….…………………….…………………………………………………………..
13
2.1.2 Bank Secrecy ……..….…………..……………………………………..……………………
13
2.1.3 Consumer Protection and Quality Assurance …………….…………….………….
14
2.2 The Role of Financial Institutions ….………………….……………………...…………….
15
2.2.1 Credit Reporting Agencies ……..………..…………………………………..………….
15
2.2.2 Banking Sector .………………………………………..…………………….……………..
15
2.2.3 Others …………………………..…………………………………..…………………..…….
16
2.3 The Role of the Authorities ……………………...…..……………………………...………..
16
2.3.1 Ministerio de Economía y Finanzas .……………………....…………………..……..
16
2.3.2 Superintendencia de Bancos de Panamá ……………….…………………….….….
16
2.3.3 Autoridad de Protección al Consumidor y Defensa de la Competencia ..….
17
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Page
2.3.4 Ministerio de Comercio e Industrias …………………….…………………….….….
17
2.3.5 Banco Nacional de Panamá ……………………………………………………….....….
18
3. PRIVATE CREDIT REPORTING FIRMS …………….………………………………………..
19
3.1 Antecedents ………………………………………….…………………………………………….
19
3.2 Asociación Panameña de Crédito ……………………………………………………………
19
3.2.1 Control and Governance .……..…………………………………………………..……..
19
3.2.2 Information Sources ….……………………………………………………………………
20
3.2.3 Users …………….………………………………………………………………………….....
20
3.2.4 Services ……….…………………………………………………………………………..…...
21
3.2.5 Pricing Policy ………………………………………………………………..……………….
24
3.2.6 Procedures and Policies to Insure Information Quality ………………………….
24
3.2.7 Procedures and Policies for Risk Management ……………..…….……………….
25
3.2.8 Rights of Individuals and Firms to Access Information and Resolve Disputes ..
25
3.2.9 Information Disclosure Policies ………………..………………………………………
25
4. PUBLIC FINANCIAL INFORMATION REGISTRIES ……………………………..…..….
26
4.1 Antecedents ..………………………………….……………………………………….………….
26
4.2 Central de Riesgos de la Superintendencia de Bancos .……………………………….
26
4.2.1 Main Objectives of the Registry ..……………………………………………………….
26
4.2.2 Information Sources ….……………………………………………………………………
26
4.2.3 Users …………..……………………………………………………………………………....
27
4.2.4 Services ….…………………………………………………………………………….……...
27
4.2.5 Procedures and Policies to Insure Information Quality ………………………….
27
4.2.6 Procedures and Policies for Risk Management …..……..……………………..….
28
4.2.7 Information-Disclosure Policies ……………………………………..…………………
28
5. INTERACTION WITH OTHER COMPONENTS OF THE FINANCIAL
INFRASTRUCTURE ……….…………………….……………..……………………………………
29
5.1 Payments Systems and Instruments ………………………………...……………………….
29
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Page
5.2 Registro de Garantías ………...…………………………………………………………………
30
5.3 Others …………………………………….………………………………...……………………….
30
5.3.1 Dirección General de Ingresos ....………………………………..…………………….
30
5.3.2 Caja de Seguro Social ...……………………………………………………………………
30
5.3.3 Registro Civil ..……………………………………………………………………………....
31
APPENDIX: Statistical Tables ……..………………………………………………………..…………
32
LIST OF ABBREVIATIONS ……….…………………………………………………..………………
38
List of Tables
Table 1. Composition of GDP by Economic Sector …………..………………..………………..
1
Table 2. Macroeconomic indicators ……………………………………………..…………………..
3
Table 3. Main Reforms to the Panamanian Banking System …………..……….…………....
4
Table 4. Composition of the Banking System …………………………………….……………....
5
Table 5. Regulatory Framework for Panama’s Credit Reporting System ………………....
12
Table 6. APC Ownership Structure …………………………………………………………………..
19
Table 7. APC Reporting Institutions ………………………………………….……….…………....
20
Table 8. Fees for APC Membership and Services by Number of Inquiries ……….……………....
24
Table 9. Central de Riesgos’ Registries ………………………………………………..…………....
26
List of Figures
Figure 1. Gross Domestic Product at Constant Prices …………………………………………..
1
Figure 2. Panama: External Sector Indicators ……………….……………………………………
2
Figure 3. Consumer Price Index and Inflation Rate …………………………………………….
2
Figure 4. Main Account Balances of SBN Institutions ………………………………………….
6
Figure 5. National Banking System Performance Indicators …………………………………
6
Figure 6. Panama: Leasing Companies ……………………………………………………………..
7
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Page
Figure 7. Financial Entities Registered in the MICI …………………………………………….
8
Figure 8. Evolution of Loans to the Private Sector and Non-Performing Loan Rate ..…
9
Figure 9. Credit Granted by Financial Sector Institutions …………………………………….
9
Figure 10. Evolution of Consumer Loans ………………………………………………………….
10
List of Charts
Chart 1. Sample APC Credit Report ………………………………………………..…………..……
22
Chart 2. Sample APC Score …………………………………………………………………………….
23
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PANAMA REPORT
1 ECONOMIC AND FINANCIAL MARKETS BACKGROUND
Panama’s economy has been dollarized since 1904. Nevertheless, a monetary conversion mechanism based on the nation’s currency (balboa) is used. This means that
transactions between economic agents can be denominated in US dollars (USD) or
balboas (PAB).
The Panamanian economy has performed favorably during recent years, registering
average annual GDP growth figures of around 8% (2004-2010). However, just as in
other countries of the region, the unfavorable external environment had a negative
impact on Panama’s economy in 2009, slowing economic growth to 3.2% (figure 1).
FIGURE 1. GROSS DOMESTIC PRODUCT AT CONSTANT PRICES
1996 constant prices in billions of balboas (left)
and annual variations percentage (right)
%
14
25
GDP
Annual variation
20
12
10
15
8
10
6
4
5
2
0
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
SOURCE: Elaborated with data provided by Instituto Nacional de Estadística y Censo.
However, according to figures from the Instituto Nacional de Estadística y Censo
(INEC, national institute of statistics and census), in 2010 the GDP grew 7.5%. Such result was much higher than the average growth recorded by the region as a whole and
was in contrast to several countries which actually exhibited negative behavior. In addition, after experiencing difficulties due to climatic factors, the primary sector also
began to recover.
As can be seen in table 1, the composition of GDP has not undergone any major
changes during the last few years. The services sector is the main driver of the economy,
TABLE 1. COMPOSITION OF GNP BY ECONOMIC SECTOR
Participation in percentage
2008
Primary Sector
Industrial Sector and Construction
Commerce and Services Sector
7.66
20.56
61.98
2009
7.21
20.36
62.33
2010
5.70
19.65
64.93
SOURCE: Own elaboration with data provided by INEC.
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PANAMA REPORT
followed by the industrial sector and construction. The primary sector has a relatively
small weight, contributing with 5.7% to Panama’s economy.
Regarding the behavior of the external sector, although Panama does not face financing difficulties, the deficit in the trade balance increased in 2010, registering similar
levels to those observed in previous years as illustrated in figure 2. Thus, in 2010 merchandise exports amounted to USD 11,330.4 million, while merchandise imports were
USD 15,945.8 million. Meanwhile, foreign direct investment has remained relatively
stable over the last five years.
FIGURE 2. PANAMA: EXTERNAL SECTOR INDICATORS
Billions of USD
2003
2004
2005
2006
2007
2008
2009
p
2010
20
15
10
Trade Balance
5
0
Exports
5
10
15
Imports
FDI
SOURCE: Own elaboration with data provided by Instituto Nacional de Estadística y Censo.
NOTE: p stands for preliminary figures.
As for price behavior, inflation rose throughout the decade, reaching 8.7% in 2008,
almost double the average level observed during the six preceding years. This result
mainly obeyed to increases in prices of foods and transport, among others. However,
as can be seen in figure 3, the situation improved substantially in 2009 and 2010 with
annual inflation rates close to three percent.
FIGURE 3. CONSUMER PRICE INDEX AND INFLATION RATE
Consumer price index, 2002 = 100 (left) and annual inflation in percentage (right)
130
CPI
Inflation
125
120
115
110
105
100
2003
2004
2005
2006
2007
2008
2009
%
10
9
8
7
6
5
4
3
2
1
0
2010
SOURCE: Own elaboration with data provided Instituto Nacional de Estadística y Censo.
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PANAMA REPORT
TABLE 2. MACROECONOMIC INDICATORS
2005
GDP (annual growth rate)
Imports (in millions of
USD)
Exports (in millions of
USD)
Current account balance
(as percentage of GDP)
Average consumer price
index (annual growth rate)
Interbank interest rate
Exchange rate (nominal
end of period)
2006
2007
2008
2009
2010
7.2
8.5
12.1
10.1
3.2
7.5
8,843.2 10,108.3 12,427.0 14,710.3 13,147.1 15,945.8
7,376.2
8,151.5
8,967.1
9,920.8 10,846.1 11,330.4
–4.9
–3.1
–7.1
–11.8
–0.2
–11.0
2.9
2.5
4.2
8.8
2.4
3.5
1.9
na
2.2
na
2.1
na
1.66
na
1.43
na
1.05
na
SOURCE: Own elaboration with data provided by INEC and SBP.
NOTE: The following notation conventions are used throughout this report: na shows that data is
unavailable.
1.1 MAIN REFORMS IN RECENT YEARS
In 2004, fiscal reform was approved in Panama designed mainly to establish advanced
income tax payments for individuals and firms, calculated at a rate of 1.4% of gross
income from sales for all companies except small businesses. This advanced payment
was meant to function as a minimum tax in order to improve collection of taxes on
firms’ revenues. However, due to the impact of this reform the Ministerio de
Economía y Finanzas (ministry of economy and finance) decided to revise its implementation. Later, in 2009, Panama’s government submitted to its legislature a series
of changes to the fiscal regime emphasizing tax exemptions for some import and export activities specifically designed to bolster focalization and the application of taxes.
This reform had been approved at the time of writing this report.
Meanwhile, the regime of Panama’s Caja de Seguro Social (CSS, social security agency)
was reformed in 2005. This body suffered from operational difficulties amounting to
120% of GDP which led to approval of a new law aimed at making financing this public
agency viable.
More recently, the Ministerio de Economía y Finanzas implemented a program
named Plan Estratégico de Gobierno 2010-2014 (Resolución No. 163, December
2009), which included an economic and social plan stipulating the programming of
public investment and improved financial planning. The Plan Estratégico de Gobierno includes criteria for allocating public resources to priority areas of the economy based on the fiscal reform promoted by Panama’s government.
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PANAMA REPORT
1.2 BANKING SECTOR
1.2.1 Recent Reforms
Panama’s banking sector has grown significantly over the last few years and in order to
respond to the market and ensure compliance with international norms and best
practices, the Superintendencia de Bancos de Panamá (SBP, superintendency of
banks of Panama) has reformed the banking sector’s legal and regulatory framework.
In general, the reform of the Ley Bancaria (through Decreto Ley No. 52, 2008)
strengthened the SBP’s regulatory and supervisory powers basing itself on four main
pillars: a) increase the reach of regulation and oversight to include all institutions and
activities which, according to the SBP, could represent a potential risk for the banking
sector; b) improve transparency and the protection of bank customers; c) establish new
mechanisms and procedures for recovering savings in cases of bankruptcy; d) improve
human resources by creating the career of banking supervisor. Some of these modifications to the financial system are shown in table 3.
TABLE 3. MAIN REFORMS TO THE PANAMANIAN BANKING SYSTEM
General regulations and
guidelines for the SBP
 The SBP’s role is stipulated and strengthened.
 The SBP is given greater involvement in the oversight and
control of banking institutions.
 It is established as the body responsible for the transparency
of banking transactions.
Definitions, licenses and
operations of the banking
business
 Banking business definitions are restricted and outlined.
 Bank operating licenses are clearly identified, thereby
establishing their capacity for offering financial intermediation services.
Confidentiality:
 Right to banking confidentiality.
 Transfer of the obligation for maintaining the confidentiality
of data in information processing bodies such as
credit bureaus.
 Review of the nature of information which should be
treated as public.
SOURCE: Own elaboration with data provided by Superintendencia de Bancos de Panamá.
The Superintendencia de Bancos also strengthened several aspects related to the
oversight of Panama’s banking system during 2009. These legal actions included:

Adjusting regulations for savings and time deposits (Acuerdo No. 009-2009, October 22, 2009).

Establishing obligation bonds for calculating the legal liquidity index (Resolución
General No. JD 032-2009, July 6, 2009), which was added to existing guarantees.
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PANAMA REPORT

Norms for calculating capital funds for high credit risks (Acuerdo No. 004-2009,
June 9, 2009).

Regulations on the content, form and frequency of the information banks must
provide to the SBP (Resolución General No. 002-2009, October 28, 2009).

Risk concentration limits applicable to economic groups and their related parts
(Acuerdo 6-2009).

Regulations on the disposal of property acquired by banking institutions (Acuerdo 3-2009).

Acuerdo 5-2009 updating regulations on idle goods.

Regulations on integral risk management, banking inspection, and guidelines on
the integrity and veracity of financial statements (Acuerdos 4-2010, 9-2010).
1.2.2 Current Structure
Panama’s banking system has become more important in recent years, not only at the
local but also the regional level. Panama is a financial center composed of banking institutions regulated under the Ley Bancaria (banking law), which authorizes them to
practice the financial business. The national banking system (NBS), i. e. the group of
banking entities with general license and firms that are authorized to grant credit to
individuals and businesses in Panama, consists of 49 institutions, 47 of which are private banks with general license and two are state owned (official banks). Panamanian
regulations allow for the operation of offshore banks. These institutions together with
the NBS make up the Centro Bancario Internacional (international banking center).
Besides the NBS, there are more than 500 institutions operating as financial intermediaries, including microcredit firms and financial companies, among others. These
institutions –which play an important role in the access to consumer credit– are regulated by the Ministerio de Comercio e Industrias (MICI, ministry of commerce and
industry).
TABLE 4. COMPOSITION OF THE BANKING SYSTEM
By the institution’s capital ownership
2004 2005 2006 2007 2008 2009 2010
Banks with general license
Private
39
39
41
40
45
45
47
Public
2
2
2
2
2
2
2
SOURCE: Own elaboration with data provided by Superintendencia de Bancos de Panamá.
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PANAMA REPORT
FIGURE 4. MAIN ACCOUNT BALANCES OF NBS INSTITUTIONS
Interannual variation in percentage
0.5
Assets
Deposits
Liquid Assets
Equity
0.4
0.3
0.2
0.1
0
0.1
0.2
I
II III IV I
2005
II III IV I II III IV I
2006
2007
II III IV I II III IV I
2008
2009
II III IV
2010
SOURCE: Own elaboration with data provided by Superintendencia de Bancos de Panamá.
The NBS is supervised by the Superintendencia de Bancos de Panamá. There are both
domestic and foreign private banks. The latter accounted for 53.1% of the banking system’s total assets at December 2010. The liquidity maintained by banks in Panama is set
out by the banking regulations which state that at least 30% of their total assets must be
liquid. However, in practice banking institutions have a liquidity index of above 60%
(including liquid assets and investments).
The performance of national banking system during recent years has been characterized by significant expansion in the volume of assets and deposits, registering average
annual growth rates of 13.5% and 15.3%, respectively, while net worth has grown at an
average annual rate of 19%. The high level of liquidity held by banking institutions is
also noteworthy. After the international financial crisis had affected different regions
of the world, the performance of Panamanian banks remained positive, although it
grew at slower rates than those observed between 2005 and 2008.
FIGURE 5. NATIONAL BANKING SYSTEM PERFORMANCE INDICATORS
Net profit / equity ( ROE) and capital / total assets ( CAP),
i n p ercentages
22
ROE
20
18
16
14
12
CAP
10
I
II III IV
2010
SOURCE: Own elaboration with data provided by Superintendencia de Bancos de Panamá.
6
II III IV I
2005
II III IV I II III IV I
2006
2007
II III IV I
2008
II III IV I
2009
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PANAMA REPORT
The national banking system indicators show financial soundness and a positive performance during the last six years. Banks’ average profitability was 15.68% with a maximum level of 21.13% (2008Q1) and a minimum of 11.35% (2009Q4). These profits
were accompanied by very stable capital solvency during the same period, reflected in
an average capital to total assets ratio of 12.95%. The capital solvency coefficient was
12.11% in 2010, which, although below the average observed during the previously
referred period, is higher than international requirements and practices.
1.3 OTHER MAJOR CREDIT-GRANTING INSTITUTIONS
IN THE FINANCIAL AND NON-FINANCIAL SECTORS
1.3.1 Leasing Companies
Leasing enables firms and individuals in Panama to sign contracts which considerably
reduce the initial cost of financing their investment projects or production chains.
In Panama, the Ministerio de Comercio e Industrias is responsible for authorizing
and auditing leasing companies. There are currently 115 companies authorized to offer leasing contracts under the regulations of Decreto Ejecutivo No. 76-1996, which
sets out the mechanisms for lessees and lessors. Among the institutions in the leasing
business are financial groups and commercial banks which have a division specializing
in such services.
FIGURE 6. PANAMA: LEASING COMPANIES
Autorized by the Ministerio de Comercio e Industrias
%
115
115
112
110
105
104
104
104
104
105
2002
2003
2004
2005
2006
106
100
2007
2008
2009
SOURCE: Own elaboration with data provided by MICI.
Leasing companies have mainly increased their presence during the last two years
(figure 7). However, according to MICI, these companies’ credit portfolios declined
by around 5% in 2009 as compared to the preceding year.
2011
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PANAMA REPORT
1.3.2 Other Non-Bank Financial Firms
Among non-bank financial companies offering credit are firms dedicated to the furniture business, as well as other small companies. These financial firms generally start to
grant credit after they receive authorization from the MICI to set themselves up as financial companies and offer credit options to their customers. Although 90% of financing to the private sector is provided by banking institutions, non-bank financial
firms have increased their share of consumer credit.
FIGURE 7. FINANCIAL ENTITIES REGISTERED IN THE MICI
Participation in percentage
300
250
200
150
100
50
0
2002
2003
Financial entities
2004
2005
2006
a
Pawnshops
2007
2008
2009
Financial leasing
SOURCE: Own elaboration with data provided by MICI.
NOTE: a Does not include remittance service providers.
Among the non-bank entities authorized by the MICI to carry out financial activities
are pawnshops, furniture stores and foreign exchange houses. Pawnshops have
strengthened their relative presence in the Panamanian market, while the number of
financial and leasing firms has remained stable.
1.4 THE CURRENT CREDIT MARKET
The behavior of loans granted by NBS authorized banks to the private sector has recently been characterized by relatively constant growth accompanied by prudent
management of portfolio quality reflected in low delinquency rates and sound balance-sheets. Figure 8 shows two distinct periods of expansion: sustained expansion
from 2005 to the first quarter of 2008 (annualized quarterly growth of 17.7%) and
fluctuating growth from the second quarter of 2008 to the end of 2010 (average expansion of 7.7%).
As for the quality of the credit portfolio, a reduction in the delinquency rate can be
seen with this index declining from 2.23 to 1.40% between 2005 and 2007. Later –
between 2008 and 2010– the delinquency rate falls to 1.08%. Furthermore, the level
8
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PANAMA REPORT
of capital provisions over past due loans remained above 100% (121.3%) during the
last six years, reflecting appropriate credit risk management by banks and good debtor behavior regarding their repayment capacity.
During the contraction of the loan portfolio, consumer (personal) credit totaled USD
5,207 million, business (commercial) financing was USD 6,570 million and the mortgage portfolio amounted to USD 6,806 million, figures equal to 28%, 34% and 38% of
the total portfolio, respectively. The consumer, mortgage and business loan portfolios
maintained their relative shares of the total portfolio.
FIGURE 8. EVOLUTION OF LOANS TO THE PRIVATE SECTOR
AND NON-PERFORMING LOAN RATE
Total portfolio in millions of USD (left) and delinquency rate in percentage (right)
45
40
35
Total loans
NPL
30
25
20
15
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
2005
2006
2007
2008
2009
2010
SOURCE: Own elaboration with data provided by Superintendencia de Bancos de Panamá.
FIGURE 9. CREDIT GRANTED BY FINANCIAL SECTOR INSTITUTIONS
Participation of the portfolio by type of loan in percentage
%
100
90
80
70
60
50
40
30
20
10
0
2005
2006
2007
Commercial
2008
Mortgage
2009
2010
Personal
SOURCE: Own elaboration with data provided by Superintendencia de Bancos de Panamá.
Most mortgage, business and construction financing is covered by commercial banks,
while a substantial segment of consumer credit is provided by non-bank financial institutions such as entities known as financieras and other non-financial companies, including trading houses and pawnshops.
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1.4.1 Key Issues in Business Finance
Corporate loans in Panama have expanded considerably, particularly in response to
private firms’ need to finance construction, external trade and services. Commercial
banks are the main source of business financing.
In spite of the contraction registered in 2009, credit channeled to business activities
has grown 15% on average during the last five years. Thus, at the end of 2010, the
corporate loans portfolio had expanded 78% as compared to its level in 2005.
1.4.2 Key Issues in Consumer Finance
Financing to individuals has also increased and has been fundamental in fostering
domestic demand.
As shown in figure 10, taking into account the NBS as a whole, consumer loans represent around 28% of total credit to the private sector. Within the latter share, 72% is
personal loans, 15% is associated to credit cards, 11% is for automobile purchase and
less than 2% is for microcredit.
FIGURE 10. EVOLUTION OF CONSUMER LOANS
Participation of the total consumer portfolio by type of loan
%
100
90
80
70
60
50
40
30
20
10
0
2006
2007
Personal
Automobile
2008
Credit Card
2009
2010
Microfinance
SOURCE: Own elaboration with data provided by Superintendencia de Bancos de Panamá.
In spite of the small share of microcredit in the total consumer credit portfolio, this
type of loan has grown considerably in recent years, increasing 83% between 2006 and
2010, followed by automobile loans and loans granted through credit cards.
1.5 MAJOR TRENDS IN CREDIT REPORTING
Panama’s credit reporting system mainly consists of a private registry named Asociación Panameña de Crédito (APC, Panamanian credit association), a public registry
run by the Superintendencia de Bancos de Panamá. The system also includes a significant number of public agencies and enterprises providing and using individuals and
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firms’ credit references for taking decisions on the allocation of bank loans and credit
or for the provision of services such as mobile phones.
The sole credit bureau (APC) is responsible for collecting information on the market.
Most firms with business activities as well as all financial institutions with loan portfolios provide this information. Meanwhile, the public registry (the SBP’s credit registry)
stores and uses all the information provided by the national banking system, functioning as a support for monitoring and safeguarding the soundness of Panama’s financial
system, overseeing banks’ credit exposure and banking supervision in general. The
public currently does not have access to this information, although information from
the SBP and APC, as well as a large amount of data from government organizations is
publicly available. Credit bureaus are supervised by the MICI.
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2 INSTITUTIONAL ASPECTS
2.1 LEGAL FRAMEWORK
The Sistema Bancario Nacional as well as internationally represented and licensed
banks that make up the Centro Bancario Internacional, are regulated by the Ley de
Bancos (Decreto Ley 52/2008 which modifies Decreto Ley 9/1998). The Ley de Bancos (bank law) lays the legal foundation for the authority of the Superintendencia de
Bancos de Panamá to oversee all banking business.
The Law recognizes banks as institutions practicing the banking business, i.e. collecting deposits from the public or other financial institutions or other means authorized
by the Superintendencia de Bancos, and using these resources to grant loans, make
investments or any other intermediary operation defined by the SBP.
As for the legal and regulatory framework encompassing credit reporting systems,
there are various regulations serving as a legal framework for the operation of private
credit bureaus and public credit registries. In first place are the specific regulations
on credit information registries approved in 2002 (Ley 24/2002) and amended in
2006, which serve as a basis for system participants to operate. Besides the Ley del Historial Crediticio (credit history law), there are other regulations regarding the development and functioning of credit information systems as shown in table 5.
TABLE 5. REGULATORY FRAMEWORK FOR PANAMA’S CREDIT REPORTING
SYSTEM
Relevant Law or Regulation
Acto Legislativo 1/2004
Political Constitution (Articles 42-44)
Ley 6/2002
Ley sobre Transparencia y Habeas Data (Transparency and Habeas Data Law)
Ley 24/2002
Ley del Historial Crediticio (Credit History Law)
Decreto Ley 2/2008
Ley de Bancos (Bank Law)
Ley 25/1996
Ley de Protección al Consumidor (Consumer Protection Law)
Ley 45/2007
Código de Comercio (Commerce Code, article 89)
Decreto de Gabinete 238/1970
Regulation on Bank Secrecy
Ley 26/2008
Código Penal (Penal Code)
SOURCE: Own elaboration
The Ley del Historial Crediticio stipulates that authorized credit reporting agencies
(credit bureaus) are obliged to preserve and ensure the confidentiality, authenticity,
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timeliness and security of debtors’ personal information contained in their registries.
Ley 24/2002 also obliges private bureaus to properly manage the storage, and transmission of data collected from credit granting institutions in order for them to clearly
reflect a customer’s credit relationship with one or more financial institutions as well
as their general level of indebtedness.
2.1.1 Privacy
Panama’s legal framework sets forth regulations on matters of individuals and firms’
data. Articles 42, 43 and 44 of the Constitución Política (political constitution) establish the legal protection of individuals’ data as an individual guarantee protecting
their right to privacy in line with Panamanian law as well as international standards
and agreements. The Constitución Política explicitly states (Article 42):
“…every individual has the right to access personal information held in public and private
databases, and request its rectification and protection as well as its removal, as stipulated
by the Law.
Such information may only be collected for specific ends and with the consent of the data
subject or by order of the competent authority in accordance with the Law...”
The Constitución Política also states that individuals’ privacy and intimacy is in accordance with the needs of the State; given that its main responsibility is enforce the
law. Article 17 of the Constitution states that public agencies can access individuals’
information and data, especially when it is suspected that criminal behavior or illegal
practices are involved.
In addition, the law of Habeas Data (Ley 6/2002) was passed in 2002. This Law grants
individuals the right to request and receive the information held by the authorities
and any other institutions in a truthful and timely manner (Article 2). The referred
law also lays down the confidentiality of data (Article 1) deserving sensitive and confidential treatment, particularly that held by the State or any other public institution
regarding individuals’ private information such as their psychological-medical condition, information on the private lives of individuals, family affairs, marital activities or
sexual orientation, their penal history and any other information not considered suitable for public access. Meanwhile, chapter V of Ley 6/2002 lays down the right to
promote Habeas Data, guaranteeing the right of access to information stipulated by
said law.
2.1.2 Bank Secrecy
Bank secrecy is a legal norm restricting the collection and distribution of credit information and other related data for use in the processing and sale of credit reports.
In Panama these regulations are set out in article 74 of Decreto de Gabinete No.
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238/1970 which specifically forbids the distribution of any type of information related
with bank debtors.
Decreto Ley 52/2008 which modifies Decreto Ley 9/1998 reforming banking legislation, establishes the right to bank confidentiality (Article 111) and states that banks
cannot distribute information on their customers or their operations unless they consent to it. Information can only be distributed without a customer’s prior consent under the following circumstances:

When the information is requested by an authority in accordance with the law.

When they are provided in compliance with laws for the prevention of money
laundering and related crimes.

When rating agencies require it for risk analysis.
Information held by the SBP on individual bank customers deserves strict confidentiality in accordance with the Ley de Bancos (Article 110) and can only be distributed at
the request of a competent authority in line with current legal norms. However, reports that are by nature public and those related with money laundering and financing illegal activities are exempt from this law.
Information which for reasons of SBP supervision must be shared with foreign overseers according to articles 64 and 65 of the current Ley de Bancos also exempt from the
provisions of Article 110.
As a result of bank secrecy, the operation of credit bureaus is subject to debtor consent, not only in terms of personal information but also for data relating to businesses.
2.1.3 Customer Protection and Quality Assurance
The Ley de Protección del Consumidor, amended in 2007, lays down the general
framework for consumer rights in Panama and includes questions relative to competition. Among this law’s regulations it is important to mention the following:

Credit information agencies’ obligation to inform the debtor on the characteristics of the services offered.

The debtor should have access to different supplementary services allowing them
to choose the appropriate services and be able to use them properly.

The protection of debtors’ economic interests should be guaranteed, particularly
regarding the existence of incorrect information on the products offered.

The debtor has the right to defend their interests against public information
agencies through legal processes, among others.
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Under the terms of Ley 45/2007, consumers have the right to complain about credit
reporting agency non-compliance with the aid of the authorities and authorized consumer protection agencies.
Regarding debtor information held by the SBP, under current Ley de Bancos regulations it is not possible for consumers to access their data and correct any errors even
though the Habeas Data law allows individuals to access information held by any public agency.
Meanwhile, Ley 24/2002 stipulates that debtor information stored in a registry must
be accurate and up to date in order to reflect the real situation in the financial system.
Article 4 of the credit history law states that data held in registries –public or private–
must reflect any payments, deposits and cancellations in individuals’ financial obligations besides any other data resulting from the treatment of information in order to
facilitate its understanding and analysis.
Ley 24/2002 also lays down mechanisms for resolving extrajudicial disputes which are
available for use by customers. Thus, private credit reporting firms currently allow
customers to access their own data in order to know their personal information and
verify if it is correct.
2.2 THE ROLE OF FINANCIAL INSTITUTIONS
2.2.1 Credit Reporting Agencies
In Panama, agencies authorized to offer credit reporting services (credit bureaus) are
also responsible for ensuring the quality of information and its proper coverage, allowing complete debtor profiles to be generated.
The powers and obligations of credit bureaus regarding matters of access and treatment of financial system debtors’ personal information are set out in Ley 24/2002.
This law (Ley 24/2002) also includes several bans on the processing of private information in accordance with that stipulated by the Constitución Política.
The law allows the credit reporting industry to operate in Panama and currently outlines the services credit bureaus can offer. This law was amended in 2006 (Ley
14/2006) to include regulations on credit ratings.
2.2.2 Banking Sector
Institutions in the national banking system are obliged to provide the Superintendencia de Bancos with information on system debtors in the form and frequency set out
in the law in order for the SBP to keep its register up to date.
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Meanwhile, institutions in the banking business are obliged to maintain internal control and loan portfolio risk management systems. These regulations are set out in the
Ley de Bancos (Title III, chapter X).
As for debtor information, each financial institution is responsible for the data it provides to credit bureaus. Due to bank secrecy regulations, information sharing requires
the debtor’s consent for their information to be given to credit reporting agencies.
Credit granting institutions are both providers and users of information sold by credit
reporting agencies.
2.2.3 Others
There are auxiliary firms within Panama’s financial system which are relevant to its
credit reporting system. Credit card issuers not set up as financial institutions are
among the firms feeding credit reporting agencies.
Trading houses and department stores offering products on credit also make agreements with credit bureaus to provide and consult information on a reciprocal basis.
2.3 THE ROLE OF THE AUTHORITIES
2.3.1 Ministerio de Economía y Finanzas
The Ministerio de Economía y Finanzas (MEF, ministry of economy and finance) is
the body in Panama responsible for the government’s public finances. After the Ministerio de Hacienda y Tesoro (ministry of finance and treasury) and the Ministerio
de Planeación y Política (ministry of planning and economic policy) were integrated,
the MEF became the body in charge of increasing the integrity of financial and budgetary management in Panama. It also continued to define and coordinate the nation’s
economic, fiscal and social policies.
In accordance with its internal regulations (DS-AL 013, November 2000), the MEF is
responsible for economic policy development and formulation, as well as the strategy,
design and implementation of general State decrees.
2.3.2 Superintendencia de Bancos de Panamá
As the main regulator of Panama’s financial system, the SBP is responsible for safeguarding the stability of the banking system, overseeing banks and –where applicablethe economic groups they form part of, granting and cancelling bank licenses, decreeing special measures for banks, as well as authorizing bank mergers. The Superintendencia de Bancos de Panamá is governed by its Junta Directiva (board of directors)
whose functions include the approval of prudential standards, interpreting legal and
regulatory decrees on banking issues and advising Panama’s Government on the development of the Panamanian banking system.
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Given the growth of banking activity in Panama and in order to bolster its supervisory
powers, the Superintendencia amended the banking regime to allow for proper levels
of bank efficiency, security and competition, as well as comply with international
standards. This modification can be seen in the Ley de Bancos.
The Superintendencia de Bancos collects and uses information on firms and private
individuals who are financial system debtors. All institutions regulated by the Ley de
Bancos periodically provide their information to the SBP.
2.3.3 Autoridad de Protección al Consumidor y Defensa
de la Competencia
The Autoridad de Protección al Consumidor y Defensa de la Competencia (Acodeco,
authority for consumer protection and the defense of competition) is a decentralized
public institution attached to the Ministerio de Comercio e Industrias. Its main aim is
to watch over consumer rights and the process of free economic competition, promoting the efficient functioning of goods and services’ markets in Panama.
In its role as consumer protection agency the Acodeco deals with issues related to all
types of products and services, including the services provided by credit reporting
agencies. However, its responsibilities do not include protecting consumers of financial services. Instead the SBP is in charge of providing consumer protection in matters
related to bank and financial services.
In accordance with Ley 24/2002 (amended by Ley 14/2006), the Acodeco is responsible for overseeing and penalizing credit reporting agencies which infringe on consumer rights.
2.3.4 Ministrerio de Comercio e Industrias
The Ministerio de Comercio e Industrias1 is in charge of planning, coordinating and
managing activities which foster the creation, development and expansion of commerce, industry, financial activities and the leverage of resources in Panama. Since its
creation it has worked on planning strategies for implementing activities aimed at encouraging the development of Panama’s manufacturing and services sectors.
Regarding matters of credit reporting, Ley 24/2002 stipulates that the MICI is the
body responsible for authorizing and overseeing the functioning of agencies in charge
of distributing credit histories. It also states that the MICI, through its powers of supervision and inspection, should guarantee that credit reporting agencies comply
with consumer information security, quality and reliability standards. In addition, the
MICI is empowered to penalize agencies which break the Law.
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2011
The Ministerio de Comercio e Industrias was set up by Decreto de Gabinete Number 225, 1969.
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2.3.5 Banco Nacional de Panamá
Banco Nacional de Panamá (BNP) is a state owned commercial bank. In accordance
with its Ley Orgánica (charter, Decreto Ley 4/2006) the BNP is the State financial institution responsible for providing the credit necessary for the development of the nation’s economy. The BNP is authorized to open an account to any bank operating in
Panama. This account is used for settling interbank market operations, transfers
through correspondent banks and in general it functions as a commercial bank current account at a central bank.
The BNP is subject to the supervision of the Superintendencia de Bancos de Panamá
for controlling its activities as a financial intermediary. Meanwhile, the Contraloría
General de la República (comptroller general of the republic) is responsible for overseeing the operation of the BNP due to the fact that it is in charge of managing the financial resources of government bodies.
Banco Nacional de Panamá also operates the banking system’s clearing house.
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3 PRIVATE CREDIT REPORTING FIRMS
3.1 ANTECEDENTS
Panama’s credit reporting system mainly consists of a credit bureau which began operating in 1957 and was set up with the aim of providing information to its members.
The development of the credit market has meant that at present it is not only banking
institutions that grant credit but there are also other firms offering financing to their
customers. These entities also make substantial use of credit reporting services as a
tool for granting loans.
3.2 ASOCIACIÓN PANAMEÑA DE CRÉDITO
3.2.1 Control and Governance
The Asociación Panameña de Crédito (APC, Panamanian credit association) was
founded as a non-profit organization composed of banking, financial and business institutions, as well as any economic agent complying with the credit bureau’s statutes
and the corresponding legal provisions.
The APC credit bureau was founded in 1957 by mainly non-bank creditors –furniture
store owners- working in the retail market. The APC currently has 731 associates and
includes institutions such as banks and cell phone companies, among others.
TABLE 6. APC OWNERSHIP STRUCTURE
Economic Group
Percentage ownership by type of member economic group
(%)
Insurance companies
1
Commercial Banks
6
Cooperatives
8
Financial companies
Telephony and Communications
Others
Total
11
3
70
100
SOURCE: APC
As can be seen in table 6, the bureau’s government structure is mostly composed of
credit granting institutions, basically businesses followed by non-bank financial
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institutions and cooperatives. Its Board has nine members representing the type of institutions it is composed of.
3.2.2 Information Sources
The Asociación Panameña de Crédito is the sole credit bureau operating in Panama.
It currently receives information from over 700 credit granting institutions. The volume of credit bureau members has allowed for a gradual increase in the information
collected, particularly that for businesses which has risen 21% in the last five years,
while the total number of reporting institutions has grown 15 percent.
In the case of the financial sector, around 50% of information comes from non-bank
financial entities, followed by cooperatives and then, despite the increase in the number of such institutions since 2005 to the present, by banks.
TABLE 7. APC REPORTING INSTITUTIONS
2005
2006
2007
2008
2009
185
34
196
37
182
35
190
40
187
41
Non- bank financial companies
94
97
86
89
84
Cooperatives
55
59
58
57
58
2
3
3
4
4
449
476
504
527
544
440
469
497
520
536
9
7
7
7
8
Financial sector
Commercial Banks
Others (e.g. microfinance companies)
Non-financial non-bank sector
Private (e.g. commercial
and telecommunications companies)
Others (other types of private contributor)
SOURCE: APC
3.2.3 Users
Only credit granting institutions are affiliated and provide information to the APC.
They are authorized to consult the private database registry with prior agreement
from the consumer.
Consumers can also consult their credit history in an internet portal run by the APC or
go to the bureau’s offices to make individual inquiries.
3.2.4 Services
The services provided by the APC credit bureau are used as a credit rating tool. They
are used by credit granting institutions for authorizing loans due to the fact that they
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show debtors’ credit behavior, reflecting their degree of indebtedness and their level
of responsibility concerning their financial obligations.
The Sistema de Referencias de Crédito (credit reference system) credit report is a
document produced by the APC showing an individual debtor’s personal information
and credit history. This product is prepared and updated using information from financial sources, mainly in the banking sector, as well as from other credit granting
institutions affiliated to the Asociación Panameña de Crédito. As chart 1 shows, a
credit report contains different sections of debtor information:

Section 1 shows a general description of the debtor along with their available personal information.

Section 2 contains a series of the individual’s active obligations by loan type,
amount and current balance.

Section 3 describes active loans and obligations one by one, showing the lending
institutions, type of relationship, loan start and finish date, amounts, balances
and days in arrears.

Section 4 contains details of cancelled loans showing the creditor, contract start
and finishing dates, the type of relationship with the debtor, and spaces for observations and amounts.

Section 5 allows the customer to include clarifications regarding references appearing in the credit report (e.g. justifications for cancellations or non-payment).

Section 6 shows the number of inquiries made concerning the debtor’s profile
over the last 12 months.

Section 7 describes the fields making up the credit history identifier, setting out
the relationship between days past due and a debtor’s payment behavior during
the last 24 months.
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CHART 1. SAMPLE APC CREDIT REPORT
SOURCE: APC
Another product offered by the bureau is the APC Score. This credit rating tool is
aimed at bureau associates rather than individual customers, and is a report generated from a statistical model which estimates probable debtor behavior based on their
payment history. This service allows the probability that a potential customer will go
90 days past due on debt payments within a period of 12 months.
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CHART 2. SAMPLE APC SCORE
SOURCE: APC
* Probability of going >90 days past due within a period of 12 months.
Another function of this service is to arrange debtors in order of non-payment probability according to a percentage scale. If a debtor is rated zero the probability of nonpayment is higher, while the percentage score increases as a debtor’s payment capacity improves.
An example of how the APC Score is presented can be seen in chart 2. The tool shows a
debtor’s personal details and their score according to the non-payment probability
model. It also includes an estimate of the likelihood that the debtor will go 90 days
past due with loan payments within the first 12 months.
Finally, the private registry offers a tool named APC Alerta. This is a service that generates online notifications delivered in the form of a report containing updates on the
credit references of a list of customers. Just like APC Score it is a tool created for information providing affiliates. The product offers the possibility of monitoring a customer portfolio under variable update frequency criteria and its main aim is to identify behavior patterns in advance when non-payment is likely. This product mainly
functions through the private registry’s internet portal and allows service criteria to be
defined based on a user’s inquiry requirements.
To complete its range of services aimed at credit granting institutions, APC also offers
other tools for monitoring debtors. One of these is group inquiry which allows inquiries to be processed en masse by selecting them under special criteria. Another tool is
the collection matrix, allowing collection strategies to be defined according to the
segment of the user’s customer portfolio, addressing not only delinquency patterns
but also customer risk.
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As for the other tools and services the bureau offers, the criteria requested by the user
determines the product’s characteristics, allowing better knowledge of a potential
debtor’s credit rating.
3.2.5 Pricing Policy
The cost of credit reports (Sistema de Referencia de Crédito, SRC) varies according to
the number of users and inquiries. Fees for business users start from USD 50 for 10 inquiries (the cost of each additional investigation would be around USD 1.00) to USD
5,000 for 5,000 inquiries (the cost of each additional investigation is USD 0.50). Inquiries can be made directly on the web page.
Table 8 shows APC membership costs and fees in 2009.
TABLE 8. FEES FOR APC MEMBERSHIP AND SERVICES BY NUMBER OF INQUIRIES
Prices and fees shown in USD
Service A*(online)
Membership**
Number of
users
Service B*(by webservices)
Unlimited enquiries
Membership**
Number of
users
Unlimited inquiries
< 20
50.00
1
Yes
na
na
na
< 40
75.00
2
Yes
na
na
na
< 60
100.00
3
Yes
na
na
na
< 75
na
na
na
200.00
4
Yes
< 150
200.00
4
Yes
na
na
na
< 550
750.00
10
Yes
na
na
na
< 750
1,000.00
20
Yes
1,100.00
20
Yes
< 2,300
3,000.00
50
Yes
na
na
na
< 2,500
na
na
na
3,000.00
50
Yes
< 5,000
5,000.00
200
Yes
5,000.00
200
Yes
SOURCE: APC
NOTES: * Additional inquiries cost extra. Plans with a score cost 30% extra. ** All associates make a one-time
only membership payment of USD 255.00.
3.2.6 Procedures and Policies to Insure Information Quality
The APC’s quality committee compares information reported by banks with data available from the SBP, cross checking values for the size and composition of bank loan
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portfolios and corroborating that the information provided does not contain subregistries in order to improve the quality of reported information. The APC has also established bilateral relationships with its associates for improving quality standards in
order to ensure the database contains reliable and accurate information.
Regarding obsolete data held by the bureau, a debtor has the right to request the deletion of any credit references that are more than 7 years old. This mechanism allows a
debtor to improve the quality of their credit report by eliminating obsolete or negative data.
3.2.7 Procedures and Policies in Risk Management
The Ley del Historial Crediticio (Ley 24/2002) regulating consumer or customer
credit history information services, stipulates (Article 5) that economic agents and
credit reporting agencies must adopt the measures or technical controls necessary to
prevent any alteration, loss, treatment or unauthorized access to debtor information
managed or held in their databases.
3.2.8 Rights of Individuals and Firms to Access Information and Resolve
Disputes
APC allows consumers to instantly access their own credit report free of charge by in-
ternet or at one of its four customer service offices. The bureau also has a service for
debtors which provides additional data such as telephone number, address or any
other pertinent information in accordance with the law.
Debtors can also submit a written request for a copy of their credit report and it will
be delivered to them within 30 business days. In line with the same legal provisions,
debtors can join the credit registry at any of the bureau’s access points. When a complaint is made concerning incorrect information, it is the reporting institution’s duty
to verify the information in question due to the fact that the MICI’s is responsible for
guaranteeing reporting institutions comply with quality and reliability standards.
3.2.9 Information Disclosure Policies
Ley 24/2002 (Article 6) stipulates that individuals and firms with access to any information related to a debtor’s credit history must guarantee its non-disclosure and, consequently, cannot reveal it to any third party except the competent authorities.
Debtors registered in the credit bureau are the owners of their data. The information
contained in their credit reports is therefore confidential and can only be consulted
by duly authorized institutions.
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4 PUBLIC FINANCIAL INFORMATION REGISTRIES
4.1 ANTECEDENTS
Information on bank loans began to be reported on a monthly basis after the SBP’s
public financial information registry was set up by Acuerdo 5/2002. When this
agreement came into force, all institutions in the banking business had to submit
their information periodically, making the credit registry of the Superintendencia de
Bancos an important source of information on Panama’s credit market. The public
registry currently collects information from the banking sector which accounts for
90% of total private sector credit in Panama.
4.2 CENTRAL DE RIESGOS DE LA SUPERINTENDENCIA DE BANCOS
4.2.1 Main Objectives of the Registry
Since the creation of the SBP’s credit registry, information has been used exclusively
and internally to support bank regulation and oversight. This data is not shared with
either the financial institutions regulated by the Superintendencia, with credit bureaus or the debtors themselves.
4.2.2 Information Sources
All financial institutions regulated by the Superintendencia de Bancos, except those
in the process of being wound up, must periodically report their information.
Since December 2009 a total of 75 institutions have been reporting information on
their transactions (two state owned banks, 43 banks with general licenses and 30 banks
with international licenses) in accordance with that set out by the law. Table 9 illustrates the different registries received by the credit registry which make up the total
volume of debtors in Panama’s banking system. Information is received on a monthly
basis from all 75 institutions with a banking license. The credit registry also receives all
the transaction registries of its bank customers, including those of individuals, firms,
public and financial sectors, and foreign residents.
TABLE 9. CENTRAL DE RIESGOS’ REGISTRIES
Number of individuals
Number of firms
Other type of registry
2006
2007
2008
2009
1,243,878
1,454,502
1,341,251
1,216,502
76,457
83,174
91,030
92,194
3,769
3,725
2,899
2,911
SOURCE: SBP
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Other credit granting institutions, such as financial societies and non-financial firms
(e.g. furniture stores), do not have to submit data to the SBP by law, i.e. they do not fall
under Superintendencia regulations.
4.2.3 Users
All the information received, processed and stored by the public registry is distributed
internally to the oversight, regulation and research areas of the SBP for its use in supervising Panama’s financial sector. According to the Ley de Bancos (Article 110), it is
forbidden to share information with economic agents. The only exception to this rule
is when authority requests information for analyzing data possibly related to money
laundering or similar crimes.
The total volume of transactions related to new or current loans reported by banks
with detailed information, including individual data on the value of the original and
circulating debt, contract start and expiry date, type of interest, type of credit, amount
guaranteed, etcetera.
4.2.4 Services
The SBP has implemented credit risk evaluation and measurement models using information stored in its databases. The characteristics and functions of the public registry mean that stored information can be used for developing models designed to
stabilize Panama’s banking system by calculating early warning indicators, stress tests
and creating macroprudential indicators.
4.2.5 Procedures and Policies to Insure Information Quality
The credit registry managed by the SBP’s Dirección de Tecnologías de Información
(IT department) periodically implements different levels of validation in order to insure the quality and security of information.
All information is submitted to the credit registry in text format, allowing the SBP to
handle large volumes of data. The SBP firstly checks that the information’s structure
and format is in line with established norms. The SBP also verifies that credit information submitted by banks generally coincides with that reported in their financial
statements. After validating the information received by the credit registry, the SBP
stores it in a transactional database. Once validated, stored and available, the information can be consulted by the SBP’s internal users.
Within the process of permanently using information for purposes of oversight, the
SBP carries out a process of verifying data to corroborate its reliability and quality. The
procedure consists of the daily analysis of information used in the SBP’s different departments in order to find any inconsistencies. The latter process is aimed at ensuring
the reliability and quality of data and is carried out rigorously.
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Besides the measures applied to the public registry, the SBP has mechanisms to insure
data quality, particularly in cases where reporting institutions do not comply with information standards (i.e. they do not report on time, or report defective information
etc.). In this regard, the Superintendencia has a disciplinary mechanism based on a
system of permanently overseeing and monitoring submitted information. The SBP also has the authority to penalize and fine if necessary.
4.2.6 Procedures and Policies in Risk Management
The Superintendencia de Bancos has internal operational risk management and contingency policies. These measures also apply to the public registry. Some of the relevant measures related to the information stored in the credit registry include the
management of alternative sites, servers placed in different locations, the application
of virtual group system technologies which continuously execute backup copies of the
data and guarantee business continuity, reflecting the fundamental elements of real
time registry.
The information regulated financial entities submit to the SBP is safeguarded by the
department in charge of its credit registry under strict IT and electronic information
protection standards. The credit registry has the installed capacity to enable it to receive a constant volume of information without it affecting or representing any potential threat to the process of collecting and processing such data. It also habitually carries out remote control operations for generating replicas to be stored in the offices of
one of Panama’s banking institutions.
4.2.7 Information Disclosure Policies
It is not necessary to have the consent of a customer or debtor for banking institutions
to report information to the SBP’s credit registry on a monthly basis. This is due to the
fact that the Ley de Bancos makes it obligatory for financial institutions to submit all
the information the Superintendencia requires for the proper fulfillment and continuation of its duties as Panama’s financial system overseer. Under no circumstances
does the SBP disclose information to third parties such as credit bureaus or financial
entities.
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5 INTERACTION WITH OTHER COMPONENTS
OF THE FINANCIAL INFRASTRUCTURE
5.1 PAYMENT SYSTEMS AND INSTRUMENTS
Information from Panama’s payment system is of utmost importance for credit reporting due to the fact that data on individuals and firms’ transactions using payment
instruments other than cash contribute to the analysis of their payment capacity or
behavior.
The US dollar is legal currency in Panama and there is no central bank. Under this
context, the legal framework for all transactions, instruments, means and agents making up Panama’s payment system is the Ley de Bancos, the Código Fiscal (fiscal code),
the Código de Comercio (commercial code) and the Ley del Banco Nacional de Panamá (BNP Ley 20/1975).
Banco Nacional de Panamá settles a large number of transactions between economic
agents. The institution is authorized to open accounts at any other bank operating in
Panama, meaning all interbank operations pass through BNP. Treasury payments are
also deposited in the accounts government agencies must hold at BNP.
Large value operations between Panamanian economic agents are made through two
main mechanisms: a) the accounts each of Panama’s banks hold in correspondent
banks abroad, allowing payments to be settled on the same day; b) the cheque clearing
houses operated by BNP, although without credit or overdraft facilities.
Cheques continue to be the instrument most used for making low value payments.
The processing of this instrument has been standardized and automated.
Low value payments other than cheques (mostly electronic transfers) are operated by
Telered, an electronic automated clearing house (ACH) owned by the banks. This
clearing house operates all transactions initiating from an originating firm for deposit
in the beneficiary’s account. The operations are transmitted to the originating bank
so it can then distribute the corresponding debits and credits. As the network operator, Telered receives the transaction files from all the originating banks and distributes them to their corresponding beneficiaries. It also creates the file for the exchange of funds between participating banks in order for it to be settled in accounts at
Banco Nacional de Panamá. Most of the banks in Panama’s banking system participate in the ACH Directo clearing house. In 2009, 12.7 million transactions were processed for a total value of USD 22.3 billion.
Cards are also becoming more important as a means of payment in Panama. There
were 1,400,000 payment cards in 2009, 42.5% of which were credit cards and the
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remainder debit cards. Payment cards are issued by banks, and at present four out of
every ten inhabitants have one.
The Sistema Clave is the network of bank issued debit cards. It is managed by Telered,
allowing the interoperability of ATMs and points of sales (EFTPOS), i.e., 1,028 ATMs
and 15,000 EFTPOS located in over 9,500 members. Regarding the Sistema Clave’s
clearing and settlement, given that Telered is responsible for the debit and credit card
network it also holds the bank accounts of issuing commercial banks for settling card
operations. These accounts are linked to those held by the same banks at BNP.
5.2 REGISTRO DE GARANTÍAS
Panama’s Registro Público (public registry) is an autonomous institution with regional
administrative offices located outside the capital. Although all the offices are interconnected by the Registro’s internal network, the registry process is made at its head
office. Among other operations, interest and taxes on vehicles (guaranteed financing,
leasing, trust funds or vehicle loans in general) and other personal property are registered. The fees and taxes on goods generally stem from related commercial credit
lines (the registry of machinery, livestock and mortgage interest). This information is
useful for knowing the possible degree of a debtor’s direct or collateral indebtedness.
Registro Público’s information can be accessed on internet by online inquiry. The reports contain a summary of the fees or taxes on personal property as well as copies of
the original documents endorsing possession of the collateral.
5.3 OTHERS
5.3.1 Dirección General de Ingresos
There are other databases relevant for the financial system and the credit reporting
system in particular. One of these is information on unpaid taxes. Panama’s Dirección
General de Ingresos (DGI, directorate general of revenues) is the public body responsible for collecting taxes. Ley 49/2009 amending the Código Fiscal (fiscal code) stipulates that the recovery of tax debts of over 12 months old can be outsourced by the tax
collection authority (DGI). The DGI is also authorized to publish the amounts owed as
well as the names and ID numbers of defaulting taxpayers in the local media.
5.3.2 Caja de Seguro Social
The Caja de Seguro Social (CSS, social security institution) is in charge of providing
social security to Panamanians. All firms set up in Panama must make the corresponding payments to the CSS in order to guarantee social security benefits to their employees. These payments, also known as social contributions, are made periodically.
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The CSS has a database of employers, including a registry of those in default. This information is relevant for the credit reporting system, particularly in the case of firms,
given that it could be a potential early warning indicator for any financial difficulties a
firm could be going through. The information could also be useful for credit bureaus,
above all when evaluating the granting of a loan to firms which have no references in
Panama’s stock exchange or the capital market in general. The information held by
the CSS on social security payment arrears is published regularly, including a list of defaulting employers and firms as well as other data such as the tax ID number (Registro
Único del Contribuyente, RUC) and the legal representative, among others.
5.3.3 Registro Civil
The Tribunal Electoral (electoral tribunal) is in charge of registering every Panamanian citizen in the Registro Civil (civil registry). The Tribunal Electoral has three main
divisions: Registro Civil, the department issuing IDs or inscriptions and the electoral
department or Organización Electoral (electoral organization). Among other functions, the Registro Civil is responsible for identifying individuals, while the inscription department is in charge of issuing ID cards. The ID card used in Panama includes
different types of national identity data generally used in credit reports.
The Registro Civil has an ID validation system (Sistema de Verificación de Identidad)
the members of which include commercial banks and the APC. Inquiries can be made
by name or ID number and the report provides such information as full name, parents’ names, photograph and ID number.
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APPENDIX: STATISTICAL TABLES
The first series of tables (A) provides information on credit reporting in Panama.
These tables have been prepared following the Standard Methodology for Country
Tables developed by the main Initiative team. This methodology is available at the
WHCRI website, www.whcri.org.
The second series (B) provides general statistical information on the financial system
and the credit market.
Series A
Credit Reporting Statistics
Page
Table A1. Basic statistical facts ……………………..………………………………………………….
33
Table A2. Bank Credit and Loans Reporting Institutions, and Other Databases Relevant to the Credit Industry ……………………………..………………………………………..
33
Table A3. Private Information Centers - Ownership Structure ………………………………
33
Table A4. Institutions Reporting to the Asociación Panameña de Crédito ………………
34
Table A5. Institutions Reporting to the SBP’s Credit Registry ……………………………….
34
Table A6. Individuals, Companies and Transactions Registered at Asociación Panameña de Crédito ……………………………………………………………………………………
34
Table A7. Individuals, Firms and Transactions Registered at Public Credit Reporting
Registries ……………………………………………………………………………………………..
35
Table A8. Credit Reports Requested from Asociación Panameña de Crédito …………..
35
Table A9. Credit Reports Requested from Private Information Centers ………………….
35
Table A10. Credit Reports Requested from Private Information Centers ……..…………
36
Series B
General Statistical Information
Table B1. Financial institutions ……………..………………………………………………………..
36
Table B2. Credit Granted by Financial Sector Institutions …………….……………………..
36
Table B3. Credit Granted by Financial Sector Institutions …………….…………..…………
37
Table B4. Quality Indicators of Credit Granted by Financial Sector Institutions ……….
37
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PANAMA REPORT
TABLE A1. BASIC STATISTICAL FACTS
Population a
GDP b (in millions of
USD)
GDP per capita (USD)
Currency exchange v.
USD
End of year
Average
2005
2006
2007
2008
2009
2010
3,228,186
14,0412
3,283,959
15,2386
3,339,781
17,0844
3,395,346
18,8129
3,405,168
19,4141
3,405,813
20,8629
4,349.6
1.0
4,640.4
1.0
5,115.4
1.0
5,540.8
1.0
5,701.4
1.0
6,125.7
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
SOURCE: INEC.
Information from 2005 to 2009 corresponds to calculations from the 2000 census, while data for 2010 is taken
from the 2010 census. b GDP at constant prices.
a
TABLE A2. BANK CREDITS AND LOANS REPORTING INSTITUTIONS AND OTHER DATABASES RELEVANT TO THE CREDIT INDUSTRY
Name
Credit reporting agencies
Asociación Panameña de
Crédito (APC)
General Description
Sole private credit bureau in Panama,
non-profit association with over 700
members
Other Databases
ID databases
Registry of corporations and
guarantees
Registro Civil
Registro Público
Others
ATT
Body in charge of managing ID cards
Body in charge of managing property
and vehicle rights, as well as setting up
legal associations
Vehicle registries, automobile
ownership
SOURCE: Own elaboration.
TABLE A3. PRIVATE INFORMATION CENTERS - OWNERSHIP STRUCTURE
Economic Group
APC
Insurance companies
Commercial banks
Cooperatives
Financial companies
Telephone and communication service providers
Others
Members’ shareholdings (%)
1
6
8
11
3
70
SOURCE: APC
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PANAMA REPORT
TABLE A4. INSTITUTIONS REPORTING TO THE ASOCIACIÓN PANAMEÑA DE CRÉDITO
Financial Sector
Commercial banks
Non-bank financial companies
Cooperatives
Others (e.g., microfinance companies)
Non-financial non-bank sector
Private (e.g., commerce and telecommunications companies)
Others (other types of private reporting institutions)
2005
2006
2007
2008
2009
2010
185
34
94
55
2
196
37
97
59
3
182
35
86
58
3
190
40
89
57
4
187
41
84
58
4
na
na
na
na
na
449
440
476
469
504
497
527
520
544
536
na
na
9
7
7
7
8
na
SOURCE: APC.
NOTE: na stands that figures are not available.
TABLE A5. INSTITUTIONS REPORTING TO THE SBP’s CREDIT REGISTRY
Financial sector
Commercial banksa
Non-bank finance companies
Cooperatives
Others (e.g., microfinance companies)
Non-financial sector
Total
2005
2006
2007
2008
2009
2010
70
na
na
na
76
na
na
na
73
na
na
na
73
na
na
na
73
na
na
na
80
na
na
na
na
na
na
na
na
na
70
76
73
73
73
80
SOURCE: SBP
a
Does not include representative offices
TABLE A6. INDIVIDUALS, COMPANIES AND TRANSACTIONS REGISTERED AT ASOCIACIÓN PANAMEÑA DE CRÉDITO
Number of individuals
Number of firms
2005
2006
2007
2008
1,182,108
48,296
1,239,205
52,246
1,335,306
56,060
1,423,998
67,246
2009
1,509,204
76,503
2010
na
na
SOURCE: APC
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PANAMA REPORT
TABLE A7. INDIVIDUALS, FIRMS AND TRANSACTIONS REGISTERED AT PUBLIC CREDIT
REPORTING REGISTRIES
Number of individuals
Number of firms
Other types of registry
2006
2007
2008
2009
2010
1,243,878
76,457
3,769
1,454,502
83,174
3,725
1,341,251
91,030
2,899
1,216,502
92,194
2,911
na
na
na
SOURCE: SBP
TABLE A8. CREDIT REPORTS REQUESTED FROM ASOCIACIÓN PANAMEÑA DE CRÉDITO
By type of institution
2005
Financial sector
Commercial banks
Non-bank financial companies
Cooperatives
Others (e.g., microfinance
companies)
Non-bank non-financial sector
Private
Public (ATT, registries, etc.)
Others (insurance companies)
Individuals or firms requesting
their own credit reports
2006
2007
2008
2009
1,026,438 1,240,992 1,677,608 1,945,998 1,411,813
758,421 943,387 1,344,342 1,631,803 1,147,881
214,236 246,690 250,214 234,486 177,789
37,678
32,442
56,336
39,740
39,616
16,103
18,473
26,716
39,969
46,527
340,072
336,961
186
2,925
na
319,766
316,774
124
2,868
na
459,550
455,090
0
4,460
na
337,983
335,745
0
2,238
na
326,706
324,895
0
1,811
na
2010
na
na
na
na
na
na
na
na
na
na
SOURCE: APC
TABLE A9. CREDIT REPORTS REQUESTED FROM PRIVATE INFORMATION CENTERS
By type of delivery
2004
Direct connection (webservice)
Internet (online - SRC)
Email
Fax
Physical delivery a
Others (includes
Consulta Lote)
na
2005
na
2006
na
2007
na
2008
766
2009
2010
89,725
na
na
na
na 1,565,453 1,853,301 1,237,251
na
na
na
na
na
na
na
na
na
na
na
na
34,288
34,835
72,456
68,359
75,462
77,618
998,544 1,331,675 1,488,302 503,356 354,455 333,925
na
na
na
na
na
SOURCE: APC
Refers to credit reports requested by consumers in our customer service centers.
a
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PANAMA REPORT
TABLE A10. CREDIT REPORTS REQUESTED FROM PRIVATE INFORMATION CENTERS
By type of delivery
2004
Direct connection (webservice)
Internet (online - SRC)
Email
Fax
Physical delivery a
Others (includes
Consulta Lote)
2005
na
2006
na
2007
na
2008
na
2009
766
2010
89,725
na
na
na
na 1,565,453 1,853,301 1,237,251
na
na
na
na
na
na
na
na
na
na
na
na
34,288
34,835
72,456
68,359
75,462
77,618
998,544 1,331,675 1,488,302 503,356 354,455 333,925
na
na
na
na
na
SOURCE: APC
Refers to credit reports requested by consumers in our customer service centers.
a
Series B
TABLE B1. FINANCIAL INSTITUTIONS
2004
2005
2006
2007
2008
2009
2010
75
39
28
6
2
77
39
31
5
2
79
38
34
5
2
83
36
33
12
2
83
36
33
12
2
88
40
29
17
2
92
45
31
14
2
Commercial banks
Banks with general license
Banks with international license
Banks with representative offices
Public banks
SOURCE: SBP
TABLE B2. CREDIT GRANTED BY FINANCIAL SECTOR INSTITUTIONS
Gross portfolio balance at December each year, by type of institution, in millions of USD
Banks with general license
Banks with international
license
Banks with representative
offices a
Public banks
2004
2005
2006
2007
2008
2009
2010
17,467
2,983
19,958
3,417
20,082
4,225
24,281
6,669
27,635
6,839
27,596
6,752
30,774
9,551
na
na
na
na
na
na
na
2,811
2,714
2,785
3,059
3,139
3,086
3,529
SOURCE: SBP
Banks with representative offices are not considered part of domestic credit due to the fact that they carry out all of
their transactions abroad.
a
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PANAMA REPORT
TABLE B3. CREDIT GRANTED BY FINANCIAL SECTOR INSTITUTIONS
Gross portfolio balance at December each year, by type of credit, in millions of USD
2006
2007
2008
2009
2010
Commercial
Short term (≤ 1 year)
Long term (> 1 year)
Mortgage
Consumer
Others
6,911
na
na
5,014
4,276
10,891
8,952
na
na
5,208
5,057
14,792
9,827
na
na
5,864
5,391
16,531
9,920
na
na
6,540
5,426
15,548
11,936
na
na
7,327
5,911
18,680
Total
27,092
34,009
37,613
37,434
43,854
SOURCE: SBP
TABLE B4. QUALITY INDICATORS OF CREDIT GRANTED BY FINANCIAL SECTOR INSTITUTIONS
In millions of USD
2006
Outstanding
Current
Past due
Provisions
2007
2008
2009
2010
27,092
26,435
343
484
34,009
33,211
394
567
37,613
36,649
519
625
37,434
36,376
448
614
43,854
42,898
388
613
25,551
795
317
272
158
32,398
824
290
320
177
35,884
961
312
317
138
35,543
1,067
320
376
128
42,025
1,079
342
308
101
Risk category
A (Normal)
B (Special Mention)
C (Below Normal)
D (Doubtful)
E (Non-recoverable)
SOURCE: SBP
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LIST OF ABREVIATIONS
ACH
Automated Clearing House
Acodeco
Autoridad de Protección al Consumidor y Defensa de la Competencia
APC
Asociación Panameña de Crédito
ATTT
Autoridad de Tránsito y Transporte Terrestre
ATM
Automated Teller Machine
BOP
Balance of Payments
IDB
International Development Bank
BNP
Banco Nacional de Panamá
CAP
Capital adequacy ratio
ICC
International Consultative Committee
CEMLA
Center for Latin American Monetary Studies
CSS
Caja de Seguro Social
DGI
Dirección General de Ingresos
EFTPOS
Electronic Funds Transfer Point of Sale
FIRST
Financial Sector Reform and Strengthening
IMF
International Monetary Fund
IFC
International Finance Corporation
INEC
Instituto Nacional de Estadística y Censo
JD
Junta Directiva
MEF
Ministerio de Economía y Finanzas
MICI
Ministerio de Comercio e Industrias
EAP
Economically Active Population
GDP
Gross Domestic Product
ROE
Return on Equity
RUC
Registro Único del Contribuyente
SBN
Sistema Bancario Nacional
SBP
Superintendencia de Bancos de Panamá
SRC
Sistema de Reporte de Crédito
USD
United States of America Dollar
WHCRI
Western Hemisphere Credit and Loan Reporting Initiative
Printed in Mexico in Master Copy, S. A. de C. V., avenida Coyoacán núm. 1450, Mexico
D. F., Mexico, 03220. 150 copies printed.
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WESTERN HEMISPHERE CREDIT AND LOAN REPORTING INITIATIVE
CENTER FOR LATIN AMERICAN MONETARY STUDIES
FIRST INITIATIVE
THE WORLD BANK
CREDIT AND LOAN REPORTING
SYSTEMS IN PANAMA
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