Panama: Financial Sector Assessment Program - Detailed Assessment of Observance and Basel Core Principles for Effective Banking Supervision
IMF Staff Country Reports, July 19, 2024
Source details
- Canonical URL
- Panama: Financial Sector Assessment Program - Detailed Assessment of Observance and Basel Core Principles for Effective Banking Supervision
Other formats
Bibliographic details
- Published: July 19, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400284670.002
Regulatory and Supervisory Framework
- The Superintendency of Banks of Panama (SBP) has made significant progress in updating its regulatory and supervisory framework.
- Regulations issued by the SBP set out a comprehensive set of requirements for a bank’s Board and senior management to be responsible for preparing financial statements that adhere to international accounting standards.
Liquidity Regulation
- Liquidity regulations are generally comprehensive.
- The Liquidity Coverage Ratio is calculated and reported on a Level 1 basis and not L2 or group-wide.
Off‑Site Supervision and Analysis
- Off-site analysis occurs on a frequent basis using a comprehensive suite of indicators and data points.
Credit Concentration Risk and Large Exposures
- The SBP has implemented a framework for credit concentration risk and large exposure limits.
- The framework does not apply to all material sources of concentration risk.
Financial Reporting and Accounting Oversight
- The SBP’s regulations require that a bank’s Board and senior management are responsible for preparing financial statements in accordance with international accounting standards.
Market Risk Governance
- Banks must identify and appropriately manage the market risks they face.
- The Board of Directors has primary responsibility for establishing policies and procedures to identify market risks.
Key Findings and Policy Implications
- SBP progress: Significant updates to regulatory and supervisory framework.
- Liquidity reporting gap: LCR is only calculated and reported on a Level 1 basis; not calculated on L2 or group-wide basis — suggesting a need to extend LCR measurement and reporting to L2 and group-wide scopes.
- Concentration coverage gap: Credit concentration and large exposure limits exist but do not cover all material sources of concentration risk — suggesting a need to broaden the framework to capture all material concentrations.
- Strong governance expectations: Clear regulatory assignment of responsibility to Board and senior management for financial reporting and for overseeing market risk identification and management.
- Supervision intensity: Frequent off-site analysis supported by a comprehensive suite of indicators and data points.
Source: Panama: Financial Sector Assessment Program - Detailed Assessment of Observance and Basel Core Principles for Effective Banking Supervision, July 19, 2024.
Content in this bundle
- 1panea2024003