Panama · BANKING
Key Facts
- —Approval Panama’s Council of Ministers approved a draft law on 26 May 2026 to progressively close the Banco Hipotecario Nacional.
- —Portfolio About 94% of the bank’s credit portfolio is non-performing, estimated at more than US$250 million.
- —Functions The bill transfers the bank’s functions to MIVIOT and the Caja de Ahorros.
- —Transition A transition committee includes the finance ministry, MIVIOT, the Caja de Ahorros, and the comptroller general.
- —Deadline Final liquidation is set for 31 December 2027.
The closure plan shifts housing finance to other state bodies, but the bank’s loan book is almost entirely unpaid.
Panama’s government has moved to close the Banco Hipotecario Nacional after its loan book failed. The Council of Ministers approved a draft law on Tuesday 26 May 2026 ordering the progressive closure of the state housing bank.
The Closure Plan
The draft law, numbered 1-26, now goes to the National Assembly. The plan involves a progressive closure with a transition committee and a transition plan.
Final liquidation is scheduled for 31 December 2027. Meanwhile, the bank’s functions will be transferred to other state bodies.
Why the Banco Hipotecario Nacional Failed
The Banco Hipotecario Nacional’s loan book is in deep trouble. About 94% of its credit portfolio is non-performing, meaning almost nobody is paying.
The portfolio is estimated at more than US$250 million. As a result, the bank can no longer fulfill its housing mission.
The Bank’s Role in Housing
The Banco Hipotecario Nacional is a state housing bank. Its purpose is to finance national housing programmes and low-cost social housing, in line with article 113 of Panama’s constitution.
Its borrowers are mainly low-income households and social housing programmes. Therefore, the failure hits the most vulnerable Panamanians.
Transfer of Functions
The bill transfers the bank’s functions to the Ministry of Housing and Territorial Planning, known as MIVIOT. The state savings bank, the Caja de Ahorros, takes the rest.
In addition, it creates a new national housing fund inside the housing policy structure. This aims to continue housing support despite the closure.
The Transition Committee
A transition committee will oversee the process. It brings together the finance ministry, MIVIOT, the Caja de Ahorros, and the comptroller general.
This committee will manage the progressive closure. However, the exact steps remain to be detailed in the transition plan.
Government Defense of the Closure
Jaime Jované, Minister of Housing and Territorial Planning, has publicly defended the closure. He calls it a move to a more modern and sustainable housing system.
Despite the criticism, the government insists the change is necessary. The bank’s loan book failure left few options.
Handling the Bad Loan Book
Andrés Farrugia, general manager of the Caja de Ahorros, is leading a plan to deal with the bad loan book. The plan includes placing it in a trust rather than taking the risk onto the savings bank’s own balance sheet.
This approach aims to protect the Caja de Ahorros from further losses. In short, the trust isolates the non-performing loans.
Next Steps in the Assembly
The bill has been received by the National Assembly and has entered the plenary. Therefore, lawmakers will now debate the proposal.
Although the outcome is uncertain, the government has signaled its commitment. The progressive closure is set to begin once the law is passed.
What Non-Performing Means
A non-performing loan is one where the borrower has stopped paying. When 94% of a book is non-performing, almost nobody is paying.
This explains why the Banco Hipotecario Nacional could not continue. In effect, the bank’s core business had collapsed.
Frequently Asked Questions
What is the Banco Hipotecario Nacional?
The Banco Hipotecario Nacional is a state housing bank in Panama. Its purpose is to finance national housing programmes and low-cost social housing, in line with article 113 of the constitution.
Why is Panama closing the Banco Hipotecario Nacional?
The bank’s loan book failed, with about 94% of its credit portfolio non-performing. This means almost no borrowers are paying, making the bank unsustainable.
What happens to the bank’s functions after closure?
The bill transfers the functions to the Ministry of Housing and Territorial Planning (MIVIOT) and the Caja de Ahorros. It also creates a new national housing fund.
When will the Banco Hipotecario Nacional be fully liquidated?
The plan is a progressive closure with final liquidation by 31 December 2027. A transition committee will oversee the process.
Connected Coverage
Sources: Panamanian government communications; National Assembly records; Panamanian press.
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