| Headline: Shakedown in the Isthmus Source: Euromoney Date: June 2000 Author: Michael Peterson For years Central Americans have told visitors that their region is grossly over-banked. A new wave of mergers suggests that this is set to change, reports Michael Peterson Despite Central America's common cultural heritage, unity among its six constituent countries - seven including neighbouring Panama - has long remained an unfulfilled dream. Trade barriers and state ownership have turned the region into a series of tiny, diversified economies, each served by its own banking industry. But things are changing fast. In the past few months Central America has found itself in the middle of a full-blown merger frenzy. Announcements of deals come almost weekly. In countries throughout the region, first- and second-tier banks are merging. And the number of serious discussions taking place behind closed doors suggests that there will be many more deals before this year is out. Central American bankers have long talked about the need for their industry to consolidate. More than 100 banks and about 100 financieras, second-class deposit-taking institutions, serve the region's 35 million population. As a result, the average Central American bank has capital of less than $20 million and makes less than $2 million annual profit. |