Guide to the responsibilities of banking boards of directors and bank shareholders

Panama Banking Authority (SBP)

Panama’s Banking Authority, the SBP, through the General Office of Regulation, recently presented, alongside its White Paper on Banking Regulation, the third edition of its Guide to the Responsibilities of the Boards of Directors of Banks and Owners of Banking Shares.

Firstly, the fourth edition of the White Paper on Banking Regulation brings together nearly 20 years of legislation, with the decisions adopted, in chronological order from 1998 to May 2017, as well as regulatory resolutions that are in force, with their respective modifications. It includes two appendices on the Anti-Money Laundering system and legislation on trustees.

The Guide itself lists those banking regulation articles currently in force (the Banking Act, all the SBP’s Agreements & Resolutions issued since 1998) that ascribe direct liabilities to company directors, to the Boards of Directors of banks and to holders of banking shares. It contains some, although not all, of the updated regulatory articles that concern, among other matters:

  • Disbarment of bank directors or managers.
  • Market risk.
  • Guidelines for loans and credit facilities to related parties.
  • External audits.
  • Corporate governance requirements for banking groups.
  • Provisions for the prevention of improper use of banking services.

Good corporate governance is indispensable if the financial system is to work properly, as the guide notes. For this reason, the SPB is using this document to provide detailed information to the sector so that it meets the requirements contained in Article 55 of the Banking Act (Executive Decree 52, 30th April 2008) by virtue of which banks will be obliged to comply with the corporate governance standards dictated by the Banking Authority.

As such, it is a useful reference tool for banks and other interested parties in its comprehensive and efficient description of the legal framework.