Mar. 3, 2016

Jaime D. Moreno R.


Jaime D. Moreno R.

General Manager, BAC International Bank

"There are a lot of opportunities to buy a house here in Panama because of the offers from the large amount of banks operating here."


Jaime D. Moreno R. began his career in the banking sector 32 years ago, from the beginning incorporating himself in important financial institutions such as Citibank and The Chase Manhattan Bank. He has been with BAC Panama for 19 years, today operating as General Manager of BAC International Bank. He is also the President of the Panamanian Banking Association.

In 2014, the bank's assets under management reached $17.3 billion. How did the bank perform in 2015?

It was a good year for us. BAC is a regional bank with regional products serving regional clients. Not only do we have our operation in Panama, we also own a bank in each of the Central American countries and a small operation in Mexico. We continue to grow in all of the segments in which we are present, namely consumer banking, corporate banking, mortgages, auto loans, and, probably the one that identifies us most, credit card operations. All of our loans are classified either as consumer, mortgages, commercial, auto, personal, or credit cards. We are probably better known here in Panama and throughout Central America as the leader in credit card issuing and acquiring —around 23-25% of our entire portfolio is in credit cards. Around 8-10% is in auto loans, 35 to 40% is in commercial loans, and mortgages are around 20%, while consumer loans are about 10%. We are diversified in the different sectors of the banking business. The same applies to our regional presence; the main countries we are present in are Panama and Costa Rica, which account for about half of our operations, followed by Guatemala and El Salvador.

What were the biggest contributors to earnings in 2015?

We were fortunate throughout 2015 with developments such as the Connect Miles cobranding with Copa Airlines, which was and continues to be a great success. It was launched in June 2015 and it has been greatly accepted. It is a good program and helped boost our sales a lot in the last six months of the year. As mentioned before, growth has been seen across all our lines of business, thus contributing to our excellent earnings.

What were the reasons for merging with BBVA and how did it allow for the bank to strengthen its position and market share here?

The acquisition of BBVA complimented what we already had. Although BBVA was small in credit cards loans, it was well developed in auto loans, and there was therefore a synergy with our operations that allowed us to achieve around a 23% market share. Similarly, they had a construction loan department, whereas we did not. Corporate and commercial loans were also important. In personal loans and mortgages, BBVA had a nice portfolio that complimented ours, although in mortgages we are a little bit more conservative than the main banks here in Panama. We finance 80% of the purchase of the sale price or the value of the property—whichever is lower. Other banks commonly finance as high as 90-95%. We want to grow our business, but sustainably; our strategy is to grow every year in every segment.

How is home ownership encouraged by the banking sector in Panama?

There are a lot of opportunities to buy a house here in Panama because of the offers from the large amount of banks operating here. There is a system called Preferential Interest in which the interest for houses below $120,000 is subsidized by the government for the first 15 years, providing much needed support to stimulate home ownership. The banks that are involved have a reference rate in function of the top five to 10 average mortgage rates.

How receptive are people in Panama to mobile banking trends and what innovations is the bank is introducing?

We are the first bank here to provide a mobile application. Everyday, people are using more electronic channels and we are working toward that. We have to make lives simpler for the client from his office or from his work. Right now in Panama we have 40 full branches and two electronic branches that used to be banks but now inside they are multifunctional self-service ATMs where customers can receive money, pay credit card bills, check their accounts online, and access our call center. We have 225 ATMs, which is a lot for Panama, and we have 35 multi-functional ATMs that can accept cash deposits. The multifunctional ATM has had a good acceptance. Customers are getting older everyday, but new customers are younger and that is the only way we are going to succeed. The reality is that the future is going to be electronic.

How does the role of the Panama Banking Association differ from the ministry and superintendency?

The Panama Banking Association was founded 53 years ago and represents 70 of the 91 banks established in Panama. The Panama Banking Association is a private nonpolitical non-profit association, and one of our main roles is to take care of the strength and wellbeing of the banking sector by providing our associates with the necessary support to ensure compliance with laws and regulations, including anti-money laundering legislation. The Panama Banking Association also has an educational arm—the International Banking Institute—that offers courses to local and foreign banking employees and non-banking employees, and is currently in the process of being converted into a university.

The 2015 World Economic Forum Report ranked Panama number 11 for the soundness of its banks. To what do you credit this strong reputation?

One reason for this is that the continued growth of the sector. Another factor is the quality of the banks here in terms of their liquidity and capital equity ratios. As of November, Panama has $117 billion in assets in the whole financial sector, a 8.35% increase from November 2014 when it was $108 billion. The average rate of non-performing loans for the whole sector as of November 2015 is 1.2%, so we have a sound loan portfolio. On the average liquidity index, the minimum requirement is 30%, and there is a formula that we can look at to calculate liquidity. The minimum is 30% and the average of the sector is 61.5%, so it operates at more than double the minimum requirements. The minimum capital equity index requirement is 8%, and as of September 2015 that figure was an average of 15.2% throughout the sector. These figures attest to how prudently the banks run their business here, and the sector is growing at a rate of approximately 8% per year.

Do you expect to see more foreign banks come to Panama?

What you have seen in Panama is a constellation of European and North American banks as well as local banks. Probably the last banks coming into Panama are the regional South and Central American banks and certain private wealth management banks from Europe. The possibility for new banks coming is always there, but all the regional banks are already here.

Panama is joining the list of OECD countries that share tax information as of 2018. What impact will this have?

Panama's President Varela addressed the UN in September and said that Panama is ready to do it, but in a bilateral way. It is willing to exchange information without pressures, and these matters have to be addressed in the UN, and not in a group of countries deciding that the UN was a forum made to discuss these types of things. So Panama's position is to analyze that on a bilateral basis depending on the geopolitical situation in those moments, and following the steps of our main commercial partners so that we can follow what they are doing. The world is more transparent, but it is important that information is exchanged properly and not misused. We have to be clear about whom we give that information and how that other party is going to use and save that information.

What are your expectations and goals for BAC International Bank and for the banking sector?

Panama is taking the necessary steps and I hope that the international community sees it that way to prevent the misuse of the financial services provided here. We are looking forward to 2016 being a good year for Panama.