OBG talks to Augusto Restrepo, Vice-President, Bancolombia

Interview: Augusto Restrepo

Which factors will help the economy withstand any future global economic shocks?

AUGUSTO RESTREPO: Panama’s distinguishing feature from other Latin American economies is its geographic position. This makes it a hub not only for transport but also for services, such as finance. In addition to attracting companies, we are also seeing that high-income expatriates are choosing to relocate to Panama.

These factors, along with infrastructure investment such as the canal expansion and the metro system, are driving the economic boom. New companies are commencing operations to make the most of these investments. This interest and continued investment is why Panama’s financial system is becoming more resilient to global economic turbulence.

What are your thoughts on the country’s emergence as a regional banking centre?

RESTREPO: Panama has been a global banking centre for decades. The country has the know-how, appropriate regulations and the expertise to manage international banks. The presence of international financial organisations has brought certain benefits and know-how, while local banks have also reached a high level of familiarity. However, some improvements need to be made, particularly to generate more efficiency in money transfers and payment systems. Another area for improvement is the ability to “capture” investors’ money. In this sense, a review of regulations is needed, as well as technological improvements, to facilitate the supply of financial services by local banks. If they succeed in implementing these advances, they will move forward and pave the way to convert Panama into a truly international banking hub.

In what ways do you see Panama’s retail banking segment changing over the next three to five years?

RESTREPO: We are confident that Panama holds vast opportunities. In Panama City itself there is a saturation of financial services, however, outside the capital people do not have the same level of access. There is an opportunity to introduce new services that are not being offered, such as more mobility to service small towns through non-banking partners or banca movil.

What were the key reasons behind Bancolombia’s acquisition of HSBC Panama?

RESTREPO: In the past 15 years Bancolombia has had a history of fusions and acquisitions, first in Colombia and then within the region – Peru, Guatemala, El Salvador. We have been in Panama for 40 years with our international operations, and we are now expanding operations here with a $5bn investment.

Panama’s banking sector is growing and HSBC Panama was a great opportunity to invest in one of our strategic markets. They wanted to sell their operations and we were looking to expand ours. HSBC Panama is a healthy bank, and we feel that, as Latin Americans ourselves, we can better understand the local culture, business environment and how to manage the risks.

What is the state of Panama’s human capital?

RESTREPO: The single biggest challenge in Panama is finding sufficient skilled human capital. I have never experienced the “talent war” that Panama is experiencing, especially in the financial sector. Companies are competing fiercely for talent and this is driving up salaries, to the point that they no longer reflect value for the skills supplied. High staff turnover only adds to increased costs and makes us less competitive. With the economy close to full employment, Panama needs to face this challenge with new laws and better regulations.

More than relaxing laws regarding the import of labour, it is necessary to improve the domestic supply.

In the long term, Panama has to strengthen its education system. In the short term, a review of the conditions for allowing companies to attract international talent, especially skilled workers, is needed. If the government does not take action on this, there is a real risk of jeopardising future investments and growth.