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
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 dividend.
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
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
"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.