Panama's banking system is undergoing a transformation phase marked by the entry of foreign capital, the consolidation of players, and growing regional integration. Ernesto Boyd, president of the Panama Banking Association, noted that this process responds not to isolated movements but to a structural trend that will continue in the coming months. Boyd pointed out that the sector is 'in some way continuing to concentrate,' driven by higher operational, regulatory, and technological demands. He explained that factors such as cybersecurity have significantly increased operational costs, forcing entities to seek scale, capital, and specialization to sustain their business. 'The most important responsibility we all have as banks is to protect our clients' savings, and that requires investment, resources, and specialization,' he indicated. In this context, he highlighted the growing international interest in Panama's financial system. The external portfolio grew by 13.7%, well above the 0.6% recorded in the local market, consolidating Panama's position as a platform for financial operations beyond its borders. This pattern aligns with the increase in deposits from abroad and recent bank acquisition and consolidation movements in the region. External deposits grew by 13.86%, far outpacing the 4.36% increase in domestic deposits. These movements reflect a clear strategy of regional expansion by financial groups seeking to gain scale and efficiency in an increasingly competitive environment. Consolidation not only reduces the number of players but also increases the average size of institutions, reinforcing their ability to invest in technology, meet more demanding regulations, and compete regionally. At the end of January, deposits in the International Banking Center reached $117,465.9 million, representing a year-on-year growth of 7.97%. The dynamism in credit was mainly driven by sectors linked to commercial activity and consumption. New credits granted in commerce—including services—recorded the highest growth, increasing by $342 million, equivalent to 38.6%. Personal consumer credit also stood out with a 13.1% increase, while industry grew by 18.5%. In contrast, sectors like construction and mortgages showed significant contractions, suggesting a reconfiguration of credit towards activities with higher economic turnover and less exposure to long-term cycles. While these processes unfold, the fundamentals of Panama's banking system show positive evolution. The consolidation process has gained momentum in recent months with a series of deals reshaping the local banking map. The most recent was the completion of BAC's acquisition of Multibank, a deal finalized last week that consolidates this group's presence in the Panamanian and Central American markets. To this movement is added the integration of Scotiabank's operations in Panama by Davivienda, a process that is part of the Colombian bank's regional strategy to strengthen its presence in Central America. This operation included the sale of portfolios in several countries, including Panama, as part of Scotiabank's progressive exit from some regional markets. In parallel, Inversiones Cuscatlán has been involved in two of the most significant operations in the country. Both operations are still subject to regulatory approval. It is expected that these last three processes will conclude in the first half of 2026. Boyd also referred to the proposed law on debt prescription, stating that the guild has expressed its rejection, considering it could generate negative incentives in payment behavior. He indicated that between 95% and 96% of Panamanians meet their financial obligations, so a measure of this type could affect those who maintain a responsible credit history. 'This law obscures that effort and assigns responsibilities that do not correspond to the banking sector,' he emphasized, noting that contractual conflicts should be resolved in existing judicial instances. Regarding interest rates, Boyd explained that international expectations point to a reduction of around half a percentage point in the coming months, in line with the evolution of the dollar and global market conditions.
