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Panama Banks Merge to Form Biggest Banking Group in Central America

Mike Godfrey, Tax-news.com, New York

23 May 2000

Two of the biggest banks in Panama are set to merge into a US$3.7 billion Central American juggernaut. The merger of banking groups Primer Grupo Nacional and Banco del Istmo will create the biggest private banking group in Pamana and Central America.
The new group will leapfrog current market leader Banco General to become Panama's biggest bank, subject to shareholder and regulatory approval.

Both banks bring different markets to the new group which will have assets of around $3.7bn - Banco del Istmo, Panama's second largest bank, is mainly a commercial and investment bank whereas Pribanco, the third largest Panama bank, focuses primarily on consumer banking and mortgages.

Both banks have also been active in pursuing acquisitions of other banks and have announced plans to expand their presence in the region.

"We have developed a strategy of growing and expanding the bank to Central America. Why? It's simple. Panama is a country of 2.5m people and $7bn gross domestic product. Central America has a population of 35m and GDP of more than $40bn," Javier Carrizo, commercial manager of Banco del Istmo, said recently in announcing plans to move into new markets such as Nicaragua, El Salvador, Honduras and Guatemala.

The merger of Primer Grupo Nacional and Banco del Istmo continues the recent consolidation trend in Panama's private banking sector which must remain agile in order to compete against the 58 foreign banks in Panama's international banking centre.

The president of Panama's banking association, Milton Ayon, said he expects even more consolidation as a result of the Primer Grupo Nacional - Banco del Istmo merger as banks look to strengthen their position in both the local and regional market.

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