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$1.328 billion lawsuit threatens National Bank stability

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$1.328 billion lawsuit threatens National Bank stability


Posted 06/05/2023

The National Bank of Panama (BNP) is facing claims in legal proceedings totaling $1,328 million, according to its financial statements at the end of 2022, with the lawsuit from the merchant Abdul Waked Fares being the largest, demanding compensation from the state entity of $1,268.7 million for alleged damages related to the transfer of his former Soho Mall shopping center to a trust.

Waked's lawsuit was initially admitted by the Third Chamber of Administrative Litigation of the Supreme Court of Justice on August 23, 2018, hence the process has been registered in the financial statements of the BNP for several years, as a relevant fact by the audit firm KPMG.

In that case, in defense of the State, the Administration attorney, Rigoberto González, and the lawyer Nelson Rojas, on behalf of the Ministry of the Presidency, appealed the admission, adopted on May 12, 2022.

On April 21, judges Cecilio Cedalise and María Cristina Chen Stanziola, of the Third Chamber of Administrative Litigation, rejected the appeal and, with this, the Supreme Court confirmed the decision to admit the demand in which the merchant asks for an amount that even exceeds the capitalization of the bank.

At this tie, the admission of the claim does not represent a tangible problem for the bank, but if it loses the case before the Third Chamber, this would be the largest compensation to which the Panamanian State would have to respond in its entire history.

As Rolando De León, former manager of the BNP, and more recently the economist Felipe Chapman have said in the past, from an extreme position, if the Court rules in favor of Waked, the bank would run the risk of a technical bankruptcy, because the amount of the demand exceeds its capital.

The economist Carlos Araúz indicates that it would be a blow to public finances and to the bank itself.


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Banco National responds to $1.328 billion lawsuit reports


Posted 07/05/2023

Banco Nacional has reacted to publications that have appeared in the last week about the admission, by the Third Chamber of the Supreme Court  Justice, of a lawsuit against the entity and the Panamanian State, assuring that the case has no legal basis.

They explain that the Bank simply acted as trustee in accordance with the instructions received by the settlors for the fulfillment of credit obligations with the 10 creditor banks, limiting itself to executing the instructions established in the contract voluntarily signed by the parties.

“ Banco Nacional de Panamá maintains that it carries out its banking and fiduciary operations in full adherence to the Law, to good faith, to the uses and customs of the market, and to the applicable regulations. All the clients of the Institution attend voluntarily in search of the products and services, since Banco Nacional de Panamá guarantees full, honest, and professional attention”, the statement says.

First phase 
It adds: "Throughout its 118 years of history, it has defended itself in law from each and every one of the legal actions that have been directed against it, defending the heritage of all Panamanians."

They clarify that it is only the admission of the claim, and since this is the first phase of the entire process, it does not represent a sentence against them. 

The defense strategy will be in charge of the Administration Prosecutor in his capacity as State lawyer, to whom the banking institution entrusts its integral defense. “It is important to emphasize that, being Banco Nacional de Panamá, a State entity created by Law, its insolvency or bankruptcy is legally unfeasible, therefore, impossible. However, a process like the one being discussed can have a significant impact and cause very serious damage to the Panamanian State and consequently to the national economy”, they point out.

They conclude by indicating that as the first financial institution in the country, it assures its clients and citizens in general that it trusts that legal certainty will be respected, that justice will prevail, and that it will continue to work in a sustained and continuous manner, providing banking services to citizens.


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