Banking Competition Back in Panama
Panama’s banking sector is again the focus of foreign buyers. The CEO of its largest player sees competition again heating up
For Panama's banks, it has long been a
familiar refrain: the foreigners are coming. Raúl
Alemán, chief executive of Banco General, Panama's
largest bank by assets, told LatinFinance that while
good competitors are coming into the country, particularly from
Colombia, his bank is undaunted by the shifting dynamics.
Growth in the country should bring more.
"The international flavor has changed,"
Alemán said. "It's going to be more of a regional
center. Those banks will support Colombian companies in the
region. They are good banks, so competition is going to be as
tough as it was with other international banks."
Bancolombia in February paid $2.1 billion
cash for HSBC's Panama operations, in a deal that instantly
made it the number two bank in a fast-growing market. Grupo
Aval, owner of Banco de Bogotá, agreed this year to buy
BBVA's Panama operation for $646 million in cash and a
For years, international investors have
been drawn to Central America's most sophisticated banking
sector. Vying for regional expansion, global banks entered the
market in the middle of the last decade, including HSBC, which
in 2006 snapped up Panamanian lender Banistmo. The global banks
have since retreated in the face of tightening global
regulation and more stringent capital requirements - but the
foreign incursions have hardly let up.
Impressive economic growth should keep
foreigners coming, Alemán said. Panama grew at 11% in
2011 and again in 2012, according to the World Bank, and is
forecast to grow around 7% this year. The pace has varied in
recent years - as low as 4% in 2009 - but Alemán expects
that growth will smooth out in the next few years.
Panama is not alone in seeing banking
M&A. Looking across Central America, Alemán said a
regional acquisition by Banco General is not out of the
question. Price, however, is a consideration. At the time of
HSBC's sale, analysts calculated the deal cost around three
times net asset value and around 16 to 17 times earnings.
"We are looking at opportunities in the
region," Alemán said. "If a good opportunity comes that
make sense to us we will do it."
General already has representative offices
in Central America and Mexico. Alemán singles out
Guatemala, in particular, as a good, growing economy where the
bank could expand.
"The Colombian banks have been raising the
prices for operations," Alemán said. "We feel they are
too expensive." LF
For the full interview with Alemán and other
regional banking leaders, as well as a breakdown of the 2013
Banks of the Year winners, see the November/December
edition of LatinFinance.