Ratings agency downgrades three banks

PANAMA’S scandal plagued banking industry took another hit on Friday, Oct 28, with the downgrading of three banks by  ratings agency Standard & Poor’s (S&P).

The report  comes in the midst of investigations into the State owned Caja de Ahorros savings bank, with allegations that ex-president Ricardo Martinelli was linked to a decision awarding a multi-million dollar loan to a consortium  largely made up of members of his inner circle.

The loan was for the construction of a convention center in Amador that was not built.

S&P has,  however,  maintained its analysis of risk in the banking industry of the country at BBB/stable/a-2.

The banks that were downgraded were Banco Latinoamericano de Comercio Exterior, S.A. (Bladex); Global Bank Corporation and subsidiaries, and Multibank Inc. and subsidiaries

The agency maintained unchanged ratings and the prospects of Banco General, Banistmo, BAC International Bank and Atlantic Security Bank.

“Bladex, Global Bank and Multibank have negative perspectives for the next 12 to 18 months due to deficiencies in the regulation, supervision, governance and transparency in the Panamanian banking system,” the report said.

Although the Panamanian banking rating remains unchanged, the tendency of risk changed from stable to negative.

The S&P report lists some factors that “are still putting Panama under the spotlight in a negative way.”

The Clinton list

This includes being placed on the “grey list” by the Financial Action Task Force (GAFI) and the inclusion by the US of Abdul and Nidal Waked and all their companies on the “Clinton list” for activities related to money laundering and drug trafficking.

“The scandals reveal certain weaknesses and significant areas for improvement in banking supervision and regulation, as well as governance and transparency in the Panamanian banking system,” the document says.

In response, the Superintendency of Banks said that “the banking system in Panama remains stable and safe.”