Panama has some of the safest most regulated banks in the world. The banking industry is a major industry in this country and the reserve requirements are very high. This is a link to the Superintendence of Banking in English, LINK . If you bank in a bank and it is not on this linked list it is not legal in Panama. You will not find any Credit Unions, Cooperativas on the list.
Panama does have some excellent Credit Cooperatives, Credit Unions. These Coops like the Cooperativa de servcios y professionals, CACSA , Coop EVE and others. Each has dedicated polities, such as teachers in the case of EVE.
These Cooperatives are regulated but not as much as banks. This article from La Estrella in 2011 points out concerns about the limited regulation.
“The regulation of cooperatives is an issue that has caused opinions among financial sector associations.
While some sectors apply stricter standards to regulate the cooperative sector, others consider it a matter already discussed and regulated.
Mario de Diego, vice president of the Panama Banking Association, believes that ‘certain cooperatives’ should be under the supervision of the Superintendency of Banks, as dedicated to raising money from the public.
Similarly, De Diego explained that the banking law prohibits any person, directly or indirectly, accepting deposits from the public through the acceptance of money on deposit, except with banking license.
Meanwhile, Robert Haley, president of the National Association of Financial Institutions (ANIFI), has previously expressed that cooperatives have a competitive advantage on financial regulation and legislation for them to raise funds from the public and its partners, which generally, costs of funds are cheaper than the lines that receive financial funding.
Cooperatives that provide services to others and come to accumulate much capital should be more regulated, because damage to the rest of the cooperatives that are smaller, said Antonio Ramos, manager of the Association of Professors of the University of Panama (APUDEP).”
Coops also called Credit Unions do pay a higher interest rates than banks to attract depositors and they will lend to people who are their members. Those who lend to public employees can easily garnish wages with a sequester to guarantee payments and generally deposits are secure.
Currently Panama’s Weekly Finance Paper reported that at least one Coop, the one being aggressively marketed to expats at our Tuesday Meetings has a possible problem. LINK
I am quoting a note I received in email this week.
“The financial newspaper in Panama (Capital Financiero) published a note this week saying that the government entity that oversees Savings and Loans Coop,s has just intervened COACECSS (which is the one being promoted by this group of Americans in Panama) because of an audit which showed the sustained non-compliance with the law that regulates them and the “financial and administrative deterioration of this Coop which jeopardizes the investments of the Coop”. ”
Since I suspect some people bought in to the 8.5% interest offered for CD’s. These accounts are not insured by anything and I would consider them high risk. The axiom is the higher the return, the higher the risk.