Loans with risk of default are focused on credit cards, personal loans, mortgages and tourism, said the Superintendent of Banks of Panama, Amauri Castillo
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To date, most of the modified credits have already been negotiated with payment agreements from Panamanian banks and their customers.
At the end of July 2022, the total loans of the financial system recorded a balance of 56,849 million dollars, of which 3,850 million dollars correspond to the modified loan portfolio, a figure which represented a reduction of 10 billion dollars or 72% compared to the same period of the previous year (2021), show the data of the Superintendence of Banks of Panama (SBP).
Of the $ 3.85 billion modified credit balance, about $ 1.1 billion would fall into the category of “higher credit risk” and could fall into “default,” said bank superintendent Amauri Castillo.
“This is a figure that when compared to what we originally recorded in the modified loans, from our point of view is a manageable figure for the size of the Panamanian banking system,” Castillo said.
The superintendent explained that the $ 1.1 billion in “bad debt modified loans” or “higher credit risk” represent a relatively low percentage, less than 2%, “very manageable”, of the total portfolio of credits. However, he acknowledged that this percentage is likely concentrated in a small number of banks.
Loans with risk of default, in particular, are focused on credit cards, personal loans (except those that have the direct discount system), mortgages and tourism, he explained.
As for the tourism sector, he commented that it is reactivating, but in a “slow” way, so they are working to encourage credit through shared guarantee programs, for example with the support of the Inter-American Development Bank (IDB). “These are figures and sectors that somehow don’t generate much concern,” Castillo said, noting that banks are still providing payment services to customers, however, it’s important for customers to get closer to their banking entities, because c ‘is still a lot of credits that unfortunately the customer did not show his face or did not approach the bank.
“Even when you don’t have a chance to fulfill your obligations right now, the most important thing is to show your face,” insisted Castillo, noting that in March next year (2023) it will be three years since the Superintendent of Banks have defined the credit risk management standards.
On 2 September, as part of the VII International Financial Summit Panama 2022, the president of the Banking Association, Carlos Berguido, told this newspaper that given the difficulty in recovering unpaid credits due to the moratorium ” Banks have been forced to set aside loans to absorb any losses deriving from these portfolios, but it is a largely solved problem ”.
Legal framework for payments
Castillo also said he was very interested and focused on achieving a modern legal framework that establishes a payment system, although the Superintendency has no legislative initiative. He pointed out that this is an issue that corresponds to the Ministry of Economy and Finance, understanding the role it has as rector of public policies, particularly in economic matters.
“This has an important component in relaunching the country’s economy as well. We would aspire – obviously the control of this is not in our hands – so that an initiative can be presented by the end of the year ”, underlined Castillo.
However, he said that this requires a procedure to present it to the Cabinet Council, then to the National Assembly, but that at this time there is also the interest of the National Bank to take a full look at the project and make additions that can give it really value, since what you want is to have an instrument, a law with all the elements that can cope in real time with gross settlement, the possibility of revocability of payments, the insolvency of a participant in the payment system.
“All these are extremely important elements that need to be delivered in a legal framework, they are not things that can be determined through a bank contract or an authority contract that will be defined in some way,” Castillo pointed out, for which Another element, from his point of view, it is that there must be an operational bank, a payment authority and clarity of participants in a payment system that can be direct or indirect participants.
The Superintendent of Banks referred to this during the launch of the new ACH Xpress service, which allows account holders via their online banking and mobile banking to make instant bank-to-bank transfers of up to $ 500 with available funds in timely .immediate manner.
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