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Looming bank regulations, imposed on Latin American banks even before the global credit crisis, have Panama bankers worried. The Federation of Latin American Banks has just met in Panama City. Banking in Panama is pretty conservative and apparently Panama is going to escape most of the pain of the rest of the world. However, Panama’s bankers and other bankers in Latin America are concerned that over regulation will reduce access to credit and stifle economic growth throughout Latin America. Will this affect real estate investement in Panama?

In press reports of the Latin American Bank Federation’s seventeenth annual meeting, La Estrella, Panama, reports concern throughout Latin America’s banking community that recent regulations meant to keep banks in Latin America solvent may have the effect of reducing Latin America’s economic growth. La Estrella quotes economist Alberto Bernal as saying that more financial regulation tends to mean less innovation in financial matters.

Latin American Economies, Banking, and the Credit Crunch

In the first decade of the century Latin America has seen its middle class expand and become wealthier. Unlike the USA there do not seem to be many sub prime mortgages in Panama or other countries in Latin America. In fact, we assume that the proposed regulations are meant to keep banks solvent. However, much of the recent economic success in Panama and elsewhere has been because of improvements in credit laws making credit available to small businesses that used to borrow from street lenders at rates of 10% every two weeks.

It is of note that recent changes in Panama’s credit laws have opened credit access to as many 300,000 small businesses which employ the bulk of Panama’s work force. In a country where traditional lending on a small scale has often been from pawn shops and street lenders charging 10% every two weeks this is a dramatic change.

Much is said of Panama’s real estate market benefiting from North Americans taking advantage of Panama’s residency requirements to retire in the tropics. Panama’s real estate investment market is also benefitting from Panama’s many megaprojects such as the Panama Canal Expansion. However, over the long haul the access to reasonable credit the small business community in Panama will probably trump all other contributors to Panama’s long term prosperity.

For those interested in commercial real estate investment in Panama it seems that Panama’s economy will continue to grow despite world wide recession. The concern is that over regulation does not turn off credit in market just beginning to benefit from improved credit laws.

Credit in Panama will still be available and commercial real estate will still be a good investment in the coming years. As with any investment sound and trustworthy advice is the key. Come to see us at ABPanama. We have over 23 years experience managing real estate portfolios. We can find a targeted commercial real estate investment for you that will provide excellent lease payments and grow with Panama. We will watch your investments closely and advise you when it is time to sell and take your profit.