Panama Banks To Merge As Sector Consolidates

by Mike Godfrey, Tax-News.com, Washington

08 January 2007

Panamanian banks Banco General and Banco Continental have agreed to a merger that will create one of the largest financial services companies in the region.

According to a filing with the Panama Stock Exchange, the parent companies of the two banks - Empresa General de Inversiones, which owns Banco General, and Grupo Financiero Continental, owner of Banco Continental - will merge to form a new entity to be named BG Financial Group Inc.

Under the terms of the agreement, Empresa General de Inversiones will own 61% of the new company and Grupo Financiero Continental will own the remaining 39%.

The new group will control assets of about US$7 billion, with a loan book of approximately US$4.5 billion and equity of US$800 million.

The merger remains subject to regulatory approval, but is expected to close some time during 2007, the filing explained.

The merger reinforces the consolidation of Panama's banking market and comes after UK-based banking giant HSBC's agreement last July to acquire all of the outstanding shares of Panama's Banistmo - the country's largest bank.

The Banistmo group also has a significant presence across Central America, providing a full range of personal and commercial banking services through a further 106 branches in Costa Rica, Honduras, Colombia and Nicaragua.

Citigroup has also announced plans to acquire Banco Custcatlan and Banco Uno.

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