Panama Shell Licensed Financiera Savings & Loan Business For Sale

Business description

This is a turnkey opportunity that comprises a shell licensed Panama based Savings and Loan institution (known as a financiera) formed in 2007 but has yet to do any business. This is a lightly regulated vehicle for accepting deposits from anyone for any amount and making loans.

This financiera was capitalized with the minimum $500,000 when it obtained its license. However, no business has been conducted and the financiera remains as a shell institution in good standing waiting for a prospective owner and operator. The capital has been withdrawn and would need to be replaced during the course of the current fiscal year if business commences. There is no requirement for some of this to be tied up in government bonds as with a banking licence. Therefore the $500,000 minimum capitalization requirement means just the working capital minimum that needs to be established as a balance sheet requirement. Financieras in Panama are allowed to accept deposits from private or corporate investors who would be paid a certain interest rate while the proceeds of the deposits are then loaned out at a higher rate. This is the basic business model of the traditional U.S.- style Savings & Loan or U.K. Building Society as they were originally conceived.

In reality the deposited funds can be loaned out to any third party individual or entity at a higher rate so long as it can be justified on paper and there is no obvious adverse credit risk to do so. The regulator would require the standard due diligence on all deposit sources accepted just as with a Panama bank - legalized passport copy, proof of address and two reference letters with one from a bank is the standard minimum. Similar due diligence and credit risk documentary requirements would also be required on the borrowers of the funds such as credit report, credit references, tax returns, proof of collateral such as a sales contract plus any other proof of capability to pay back the loan as circumstances might dictate. It's simple and uncomplicated core banking business. A financiera has the flexibility to be useful for a wide variety of existing businesses who for instance may wish to channel investor funds into projects or make loans to related companies for investment purposes. Used as a "captive" within a closely owned group of companies it is also well suited for achieving tax mitigation purposes while creating an opportunity for a new profit center. There are many possible applications only limited by the bounds of a creative entrepreneur's mind.

The financiera makes a great stepping stone to a fully licensed bank. Some of the problems that most would be entrepreneurs have in starting a bank anywhere are:

1. Raising the necessary liquid capital and being able to prove the source of the funds and that the funds are truly an asset.
2. Unattractiveness of locking up a portion of that capital in government bonds.
3. Lack of provable management and operational experience in operating a financial institution to satisfy the regulator.
4. No existing bank or alternative financial institution with a record of success that regulators can see.
5. Necessity of finding trustworthy local partners with banking experience that will be acceptable to the regulator.

There are often creative solutions to each of these stumbling blocks but the fact remains obtaining an offshore banking licence for an existing financial institution with a good track record is the easiest and surest way to obtaining one. Panama is one of the few credible banking jurisdictions where an offshore banking licence is possible to attain in a country where there are still real bank secrecy laws, but every Panama banker will tell you that the Superintendent of Banking runs a "tight ship". An examination of all the recent new bank licenses issued over the last few years will reveal a common trait: they were not all necessarily existing banks but almost all were financial institutions of one type or another that made successful applications.

A large percentage of financieras eventually end up as licensed banks in Panama. The barriers to entry for forming a new financiera are now more difficult then ever before because the regulators are not only looking for a very solid history of financial management and banking experience amongst the directors but also the business plan has to be somewhat unique and not appear to be encroaching too much on Panama's already crowded financiera marketplace, where it is easily judged that there are ample already serving the most common market niches. In other words they want to protect the market from what they perceive as too much competition that could negatively impact the financial health of established financieras.

Two years of demonstrated success as a financiera in Panama would probably be all that is necessary to then be able to easily apply with success for either the coveted General Banking License ($10M paid-in capital requirement) or the Offshore License ($3M paid-in capital requirement).

No business was ever done by the principals through this financiera who now wish to sell this as a viable turnkey business opportunity. This is a rare hard-to-find opportunity and licensed financieras in the past have changed hands for up to $1 Million because of their value and flexibility.

Business Operation

Reasons for selling:

Became too busy with other businesses to devote time to building financiera business