$1.328 billion lawsuit threatens National Bank stability

The National Bank of Panama (BNP) is facing claims in legal proceedings totaling $1,328 million, according to its financial statements at the end of 2022, with the lawsuit from the merchant Abdul Waked Fares being the largest, demanding compensation from the state entity of $1,268.7 million for alleged damages related to the transfer of his former Soho Mall shopping center to a trust.

Waked’s lawsuit was initially admitted by the Third Chamber of Administrative Litigation of the Supreme Court of Justice on August 23, 2018, hence the process has been registered in the financial statements of the BNP for several years, as a relevant fact by the audit firm KPMG.

In that case, in defense of the State, the Administration attorney, Rigoberto González, and the lawyer Nelson Rojas, on behalf of the Ministry of the Presidency, appealed the admission, adopted on May 12, 2022.

On April 21, judges Cecilio Cedalise and María Cristina Chen Stanziola, of the Third Chamber of Administrative Litigation, rejected the appeal and, with this, the Supreme Court confirmed the decision to admit the demand in which the merchant asks for an amount that even exceeds the capitalization of the bank.

At this tie, the admission of the claim does not represent a tangible problem for the bank, but if it loses the case before the Third Chamber, this would be the largest compensation to which the Panamanian State would have to respond in its entire history.

As Rolando De León, former manager of the BNP, and more recently the economist Felipe Chapman have said in the past, from an extreme position, if the Court rules in favor of Waked, the bank would run the risk of a technical bankruptcy, because the amount of the demand exceeds its capital.

The economist Carlos Araúz indicates that it would be a blow to public finances and to the bank itself.