Panama Bad Bank Loans Increase in Amount

Executive Summary - This article is based on an article that appeared in La Prensa Newspaper, which is Panama's largest newspaper. The source is credible and a picture of the article appears below on this page. The amount of Panama Bank bad loans has been increasing. In May 2008 the amount of bad loans were $370,000,000. In May of 2009 the amount is $565,000,000 an increase of some $200 million dollars. This is 2.5% of all the loans in existence. Loans over 90 days in arrears are now totaling $92 million dollars, which represents a 23% increase. Read article here: http://mensual.prensa.com/mensual/contenido/2009/07/17/hoy/english/economy_356.asp

Discussion - Panama additionally has been given 15 days to create more transparency in the banking laws to share more information freer. The link to this story and the newspaper article reproduced can her found here:

Banking industry prepares to open up its books

This will cause a certain amount of capital to leave the Panama banks. How much? You can guess at this just like me. My opinion is that it will be significant. As one of our readers you are by far way more informed that 90% of the people using Panama Banks. In our conservative opinion there is a risk of this capital flight causing some banks to become illiquid and go into liquidation. Combined with the economic downturn in Panama, declining Panama real estate values and incomplete failed real estate projects, job losses and high unemployment, declining tourism evidenced by low hotel occupancy rates and high debt capital flight could have a significant impact on the Panama Banking sector (again our conservative opinion).

Non Offshore Tax Havens for Banking - We have been advocating that one should move their banking to a jurisdiction that is not located in a tax haven country. We are using Costa Rica, Ecuador, Mexico, and Guatemala for banking. None of these countries tax any offshore-derived income. All the tax haven jurisdictions can be in trouble from the new tax treaties calling for information sharing on a suspicion of tax evasion with loose standards for the information request. To avoid any impact on the banks from capital flight we are only using non tax haven jurisdictions where there should be no appreciable capital flight.

International Trust Agreement Banking - We are using this approach to banking to keep our clients safe, secure and private. The details can be found here:

Click here: International Trust Agreement Banking

Warning Close Accounts Before the Treaties are in Effect - It is advisable to close your accounts before any tax treaties are entered into. Hong Kong has taken to treating any sudden account closures and/or sudden withdrawals of large amounts of funds as suspicious transactions and are freezing the accounts pending an investigation. What these investigations entail or how long they take will vary from country to country and bank to bank. We cannot say for certain that every country will be doing this but it is a reasonably sound speculative conclusion. We tend to stay conservative in the way we approach these matters and assume the worst so we can have our clients prepared if it does occur. If your account is closed at the bank before the new tax treaties go into effect then the treaty should not cover any previously closed account and the bank records would be safe under the old bank secrecy laws. Retroactive laws are as a rule not allowed in almost every country.

Questions always welcome.

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Aurelia Masterson is an associate of Panama Legal law firm (http://www.panamalaw.org). She has years of experience in the field and now shares her observations of current events, politics, and law with the Internet community. She can be contacted at: aurelia@panamalaw.org.