The International Banking License in the Republic of Panama 

June, 2009 - Ricardo Arias, Associate, Panama City office

I. Legal Framework

The banking business in the Republic of Panama is regulated by Decree-Law No. 9 of February 26, 1998 and its amendments (the “Banking Law”). The Banking Law created the Superintendency of Banks (the “Superintendency”), which is the government agency in charge of supervising and overseeing banking operations and the exercise of the banking business in the Republic of Panama.

Under the Banking Law, no person may engage in the banking business in or from the Republic of Panama without having first obtained the pertinent license from the Superintendency. The Banking Law contemplates three types of banking licenses, namely: (1) the General Banking License, (2) the International Banking License, and (3) the License for Representative Offices.

The International Banking License allows the holder to direct, from an office in Panama, transactions that are perfected, completed or have their effects abroad, and to engage in any other activities as authorized by the Superintendency.

II.Introductory meeting with officers of the Superintendency

Prior to filing the application for an International Banking License, it is required that the bank promoters or their attorneys or representatives, meet with officers of the Superintendency. At said meeting, the promoters or representatives of the bank shall make a presentation on the following subjects, among others: (a) the general background of the promoting group, (b) the activities to be carried out by the bank, (c) a financial forecast, and (d) the stock composition and administrative structure of the bank. Within the next five (5) working days, the Superintendent will inform the promoters of the bank of the opinion of the Superintendency as to whether or not the bank license application may proceed.

III. Filing of application and issuance of banking license

After the meeting with officers of the Superintendency, and based on the result thereof, the application for the International Banking License shall be filed. This process is divided in different stages. This application must be filed through a lawyer and shall be accompanied by certain documents related to the following: (a) articles of incorporation and other constitutional documents of the applicant company or its promoting group, as well as such corporate authorizations issued by any of the latter whereby the application for the International Banking License has been approved; (b) general information regarding the identity, education, experience and financial situation of the persons that will be the directors, officers and stockholders of the bank; (c) a certification issued by the proper authority in the applicant’s or promoter’s country of origin evidencing its due registration and authorization to engage in the banking business in its country of origin; (d) information related to the economic group of which the applicant is a member; (e) evidence that the applicant has a minimum initial capital of THREE MILLION DOLLARS (US$3,000,000.00) and that TWO HUNDRED FIFTY THOUSAND DOLLARS (US$250,000.00) of said amount has been deposited with the National Bank of Panama in the form of a guarantee in favor of the Superintendency; (f) financial statements of applicant and/or promoting group for the last two fiscal years; (g) information regarding external auditors; (h) business plan and feasibility study that must contain financial projections of the applicant, organizational duties forecasted and expected profitability of the bank; (i) documents that contain procedures, policies, handbooks and further manuals that develop the administration of the risks associated with the operations of the bank; and (j) any other documents and information requested by the Superintendency.

Upon receipt of the application, the Superintendency will first review the documents to determine if they are complete or not and then, if the documentation is complete, the applicant must publish a notice, for three (3) consecutive days in a newspaper of national circulation, regarding the application for an International Banking License filed by the applicant.

Once the Superintendency has received all the documents to its satisfaction, it may decide to grant a permit to the applicant to register at the Public Registry the Articles of Incorporation and further corporate documents of the applicant corporation. After the incorporation documents of the bank have been recorded at the Public Registry, the applicant shall file with the Superintendency a request for a permanent International Banking License. This request shall attach a copy of the articles of incorporation of the applicant, duly recorded at the Public Registry, and must provide evidence, by means of an affidavit or certification from a CPA, that the applicant corporation has, at least, a minimum initial capital of THREE MILLION DOLLARS (US$3,000,000.00) as required by the Banking Law. Upon receipt of the application for a permanent International Banking License, the Superintendency shall have a term of 120 days to decide whether it grants or denies the license.

IV. Estimated timeframe to obtain license

From the filing date of the initial application, and assuming that all documents required by the Superintendency were complete upon presentation, the process for an International Banking License is estimated to take between four (4) to five (5) months.

According to statistics released by the Superintendency, thirty two (32) banks currently operate from Panama with International Banking Licenses. We at Morgan & Morgan have specialized knowledge and vast experience in the provision of legal services to banks that intend to perform, from within Panama, banking transactions that are perfected, completed or have their effects abroad and that require an International Banking License for said purposes.



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