Is Banking in Panama all it’s cracked up to be?
Panama is known for being an international banking center. And, that’s fantastic. But what does it really mean for you, as an expat looking to move to Panama, or retire to Panama. Will banking in Panama for you look anything like it does in your home country?
The answer to that question depends on where you’re from, of course, but since most of my readers are from North America, I’ll be speak to the answer from that perspective.
Opening a bank account in Panama
Well, it’s not easy. Yes, I know you can open a bank account online almost anywhere or with any bank in the States, but that is NOT the case here in Panama. And, while some banks are better than others, the process is wholly much fraught with hassles than you’d expect, coming from the U.S.
First, plan on the opening process to take at least three weeks. That’s right, I said weeks, not days. Last year, when my husband and I decided to consolidate some accounts at the bank we’ve used for two years, we thought perhaps it would be a little faster because they know us. And, it was faster…but the process still took two weeks.
What do you need in order to get a bank account opening in Panama? For the most part, you need a valid ID like a passport. You need two reference letters from either local or international banks, to verify that you’re not a bad guy like a money launderer or someone running from the law. And, you’ll need to fill out a bunch of laborious paperwork, telling them everything about you, your family and where the money comes from and so on and so forth.
The paperwork piece is the part that always gets me, especially when we were already doing everything online in the U.S. before we moved here, seven years ago. This is one of the best examples of Panama being about 20-30 years behind the U.S.
Are you a U.S. citizen?
If you’re reading this blog, you likely are. So it’s important to know that many local banks in Panama no longer open accounts for U.S. citizens. Why, you might ask? Because the Panama banking systems now fully correspond with the Internal Revenue Service in the U.S. and they are required to file paperwork every year with the the U.S. government telling them your name and your balances (if they are above $10k or $50k, depending on the required form) in order to stay compliant with IRS and Department of Treasury regulations.
Now, let it be understood, I don’t have any problem with this. It’s designed to catch the bad guys, right? But, these new regulations have become pretty darn laborious for a country whose banks are already mired in paperwork up to their knees.
As a result, many local banks politely will tell you – once they know you are a U.S. citizen – thanks, but no thanks, we won’t open you an account here. Other local banks will take your application with a smile, and then never call you back.
For more on that smiling refusal to deliver bad news to you when you’re an expat in Panama, please refer to my first book, The Gringo Guide to Panama: What to Know Before You Go.
A recent banking in Panama debacle
This just happened to me last week. I bank at Banistmo, which is the bank that bought out HSBC in Panama two years ago. They’re a big bank and their service is not known to be great, to put it mildly.
So, last Friday, I went to use my debit card. I’ve had this debit card for at least three years, including the past two since the buyout happened. Last Friday, it decided to stop working, and it gave me an unusual error on the ATM screen about how “this card is not programmed to work in this fashion”. Huh?
Happily, this ATM was right outside my usual branch where I live. So I went inside and waited to see a customer rep. The usual rep I see was not there, so I was introduced to a new face. This young man was very nice.
I explained what had happened. I showed him my debit card. The young man immediately said, “Right. That’s because the old debit cards stopped working today, and the new ones will start working tomorrow.”
Huh? Of course, I’d never received any such notification. How were account holders notified of this change? I asked. And the answer was that a massive email had been sent out two weeks prior.
My next question was to check what email address they had for my account, as I did regularly receive emails from the bank. Sure enough, my email address was correct. But, alas, I had never seen that email. Hmmmm.
Next, I asked: Well, how can I get a new card then? The young man looked up our accounts and said that normally the new debit card would be sent to the branch where I had originated the account.
I had to think. It had been seven years after all. Okay, I told him, I opened the account in Marbella, which is the largest branch in the entire city, located downtown.
The man disappeared to go do some research, and came back 20 minutes later.
You have two options, the man told me. You can go pick your new cards up at that branch, or we can send for it to be delivered here, and I’ll call you when it arrives.
Are you positive that my card is at that branch? I asked.
No, he told me. But I have contacted them and they will confirm back to me within 24 hours.
This was a Friday. 24 hours meant Monday, at the earliest. Don’t worry, he said, I’ll call you and let you know.
Meanwhile, I am without a debit card for the weekend.
Monday comes and goes. Tuesday comes and goes. Wednesday arrives. I return to the bank to see my new friend. He greets me with a smile when he seems me. Hello, he says, how can I help you? He knows he knows me but has no idea why I am there.
But, having lived in Panama for 7 years, I can tell you that he probably really does not remember. So I remind him: I was here last Friday. My debit card stopped working. You researched it and told me that you were waiting to get confirmation from the branch where I opened the account to see if they had it there.
Right, he said, without a trace of embarrassment. I made myself comfortable in his office because I knew this was far from over. I started reading a magazine.
45 minutes later, we still did not have resolution. The branch where I opened the account informed my friend that the card was not there. (It turns out they had actually emailed him this information, because he found it in his email when I was sitting there.) More checking on the computer and a couple more phone calls to determine that my card was in fact at the Tumba Muerta branch.
Why is it there? I asked. I’ve never even been to that branch!
The man had no idea. Let me send for it, he said, then it will come here and you can pick it up.
How long will that take? I asked, now resigned to the fact that I’d better stock up on cash while I was there, since my new debit card was nowhere in sight, my old card wasn’t working, and the new one probably wouldn’t be for some time.
Five days, was the reply.
FIVE DAYS!
I could literally walk from my house in Arraijan to Tumba Muerta in about four hours.
Why does it take five days? I asked.
He couldn’t tell me that, except that it was bank policy for it to take five days. This can be maddening for a North American used to making sense of well, everything.
Can’t I just go pick it up? I asked, desperate at this point.
No, I’m sorry, you can’t. He said.
There was no reason. Just that’s the way it was.
By the way, five days means five BUSINESS days, so I can’t even go back to the bank to ask again until next Wednesday.
Which means I’m getting used to operating without a debit card, again.
Ugh.
I’ll do another post once this is resolved to let you know what happens. Let’s hope it doesn’t take three weeks!
Just to comment that I am a Panamanian residing in the U.S. and stories like these are the ones that keep me from returning to live there. Cost of living might be lower, but there is a high price and lots of patience needed. I am type “A” personality and just cannot live with the idea of not having good customer service. From my experience in Panama over the last few years I have visited, peoplel are just laid back and don’t care about satisfying the customer like the U.S. I have no patience dealing with contractors who take your money and disappear and you having to hire someone else and no recourse at all. Naturally, we have such problems in the U.S. but there are remedies such as going to court. I will visit, but to live and not having banking services the way I have it now where the bank pays all my bills, is just unthinkable.
hi Celmira, thanks for stopping by the Gringo Guide to Panama blog! I appreciate your comments. The idea of the information I share here is based on my own experiences (with the exception of other expat interviews) and while it is not always the rule of thumb, sometimes it is.
Customer service in Panama generally – as you describe it- is lacking as a whole. However, there are some places that will knock your socks off!
And, as for recourse, I understand what you are saying. The judicial system in the U.S. and many other places does function more smoothly and more consistently that the system here in Panama. The new government has made a revamp of strengthening the judicial system a priority for the next five years, but that said, nothing changes overnight.
Thanks for stopping by!
My advice for expats is to not even try with Banco General. I gave them every single requirement they needed and they kept coming back with excuses like, “Ohhhh, well I don’t like this signature…” Ohhhhh, but you need another letter.” And I did everything that they wanted. Finally, they straight up told me that they don’t open accounts for Americans because the process is too difficult for them.
The best thing you can do is find a friend that “Knows somebody” that works at a bank. If you pay them, they’ll create an account for you. If not, it’s almost impossible as an American to get an account. I also got an account at Banistmo. I’ve heard Credit Unions are another good option for Americans.
hi Stephanie, how are you? How is life in Panama treating you?
Thanks for your comment here. As I mentioned in this post, it’s often the case that most banks don’t want to open new accounts any longer for Gringos because of all the US government paperwork related to doing so. It does make it a bit tough.
I hate to hear you had to pay someone! That’s a little scary, but it sounds like for you it was a reality. Unfortunately, that type of activity isn’t really helping Panama’s anti-corruption rating decrease.
Thanks for stopping by and my best to you!
OMG Elizabeth Vance! Just tried top open an account today at Multi-bank based on what they said we needed. Nope, not today. Got the expat run-around and were told we need more reference letters. Tried Caja de Ajorres here in Pedasi…even more hoops! ARRRGGGHH!!! TAKE MY MONEY!!!!
hi Al,
Of course, your comment made me laugh, sorry. Meanwhile, three weeks later – I still don’t have a debit card yet from Banistmo! The good news is that it’s turning into lots of fodder for sharing here (and on social media). Let me know where you end up, as I can always share that too, in a future post.
I still want to interview you guys! Later this month?
Best to you!