Panama’s technological advances and connectivity allow its banking entities and their clients to expand their business relations at an international level. Therefore, economic, political, social and even weather-related events, which may generate uncertainty and expectations in those countries with which Panama maintains economic relations, may adversely impact the results of businesses in Panama.

For example, the Venezuelan elections, the popular protests taking place in Nicaragua, the eruption of the Volcán de Fuego or ‘Volcano of Fire’ in Guatemala, the new diplomatic and economic relations between Panama and China and the formalisation of Panama’s Free Trade Agreement with Israel, have all had a notable impact.

The Superintendency of Banks of Panama, through its rule-making powers, requires banks to manage their businesses in an specific manner, based on different types of risk, as we shall explain herein.

Country risk management

In order to regulate risk management related to specific country risks, the Superintendency enacted General Resolution No.7-2000. It established minimum criteria, relative to the appropriate policies and procedures for the identification, review and control of country risk, in activities relating to all loans, bank deposits and investments in securities, to enable the creation of adequate provisions to cover the risk.

Oct-Dec 2018 Issue

MDU Legal