Out of the Many, One?

May 2, 2008

Led by Panama and propelled by trade agreements, Central America seeks to extend growth. With stronger links to the US and Europe, it must decide how far to integrate. by Ben Miller

In September 2006, HSBC bought Panama’s Banistmo, giving it access to new retail banking markets in Central America and instantly making it the biggest bank in the country. Not to be outdone, a merger between indigenous lenders Banco General and Banco Comercial crowned a new Panamanian leader.

Those transactions followed Citi and Scotia’s entrances into Guatemala. Meanwhile, Guatemala’s Banco Industrial swallowed compatriots Banco Occidente and Banco Quetzal, as well as Banco del Pais in neighboring Honduras. Industrial is now looking to conquer southern Mexico.

“There has been a significant movement in the last 18-24 months to increase integration among the different economies of Central America,” says Francisco Sierra, executive vice president for finance at Banco General. “The global and regional banking institutions have taken action to acquire banks to provide regional coverage for their clients’ operations.”

The individual countries’ different characteristics and stages of development are a challenge, Sierra says,...

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