by Jon Hanna, Panama Offshore Legal Services

Christmas literally means “Christ’s mass”, and although it is a Christian holiday, meant for the celebration of the birth of Jesus, the holiday is celebrated in many non-Christian countries such as Hong Kong, Japan, Korea, and other countries where they have adopted the Christmas tradition of gift-giving, Santa Claus, and even Christmas trees.

Around the globe, on Christmas day, millions of people will be giving gifts to their loved ones.  Usually the gifts you receive at Christmas are either perishables like chocolates, cookies, or material items like clothes or toys, which generally last a few months or years, and are then thrown away.  How amazing would it be if you could give your loved ones’ a gift that kept on giving?  A gift that paid them 8.33%?  There is a gift that allows you to do just that, and it’s called the “Christmas CD”, offered by most Panamanian Credit Unions.

Every year, during the month of December, Panamanian Credit Unions offer a special “Christmas CD”, that pays 8.33% interest, on a 1 year Certificate of Deposit in US Dollars.  The CD must be opened during the month of December, and the interest and principal is paid back to the depositor the following 30^th of November.  The minimum deposit is US$5000.00.

Several other savings and deposit products are also available, including regular savings accounts paying 4% compounded interest, certificates of deposit paying from 6 to 8% interest, and a 5 year retirement savings account paying 9% compounded interest.

Panamanian Credit Unions have been around for over 70 years, and there are over 150 of them in Panama, but very few non-Panamanians know about them because memberships have traditionally been limited exclusively to Panamanians that are employees of specific government organizations or industry specific organizations.  However, there are a select few Panamanian Credit Unions that have opened their doors to foreigners, via professional introductions through Panama Offshore Legal Services, a well established law firm in Panama.

The credit union we are referring to in this article is among the top 10 in the country, with over 40 years of successful operations, with over 15,000 members who are employees of the largest government ministry of the country.  Their financials are solid, and their business model has not changed since their inception.

The wonderful thing about Panamanian Credit Unions is that their business model is simple (savings and consumer loans), their financial statements are transparent, they have ample liquidity, and any competent financial professional can evaluate the risk simply and easily.

On the other hand, the “too big to fail” banks have made it a regular habit to hide the true nature of their financial health by creating fake profits out of thin air, and throwing their liabilities into off-balance sheet subsidiaries – and the crazy thing is that the government allows them to do this – it’s all under legal banking rules. With large, international banks, we literally have no idea what’s really on their balance sheets, with over $8 trillion in toxic mortgage-backed securities in the international banking system, plus trillions in derivatives contracts wrapped around the toxic mortgage-backed securities, which makes their well being highly sensitive to housing, interest rates, and several other systemic risks.

With these banks that are “too big to fail”, we have no idea what their true risk is, when the foundations of our international financial system can no longer be accepted as truth, so the masses simply assume that the balance sheets of our banks are healthy, without transparent information to truly determine the risk.

The good old days of banks engaging in sound, profitable, deposit and lending practices, and being responsible stewards of money are over.  Today, the big banks don’t pay depositors a fair rate of interest, and they don’t make sensible loans to people who have good credit.  Instead, because they require massive liquidity, they invest trillions in the most liquid government bond markets, which happen to be bonds issued by countries that are the most broke of all. If you bank with a bank that is “too big to fail”, they most likely bought treasury bonds at record low yields within the last 30 days – bonds that may very well be worthless in the near future if those governments default on their interest payments.

In today’s broken global banking environment, anything termed “government-guaranteed” is simply a hoax, including federal deposit insurance, which are so poorly capitalized that they make the banks insolvency look good.  The sad thing is that insolvent governments are falsely offering deposit guarantees they cannot truly back, so depositors are ultimately assuming the risk, 100%.

Panamanian credit unions are non-profit cooperatives for savings and loans, regulated by a Panamanian regulatory body for credit unions.  It does not get any more simple than this, and it is truly like the good old days of sound deposit and lending business.

Panama credit unions can pay higher interest than banks for several reasons:

1) Tax Exempt:  they are non-profit organizations that are tax exempt on their profits, and all interest earned by depositors is also tax free in Panama.

2) Low Overhead:  credit unions are owned by their members, who elect a board of directors and general manager that are paid very humble salaries – no outrageous bonuses to CEO’s or bank officials, and no crazy spending on advertising (they don’t advertise).

3) Low Operating Costs:  credit unions offer basic services of deposits and loans, nothing more – no online banking, no debit cards, no investment services, no fancy offices.

4) High Interest Loans: credit unions offer convenient consumer loans to their members, at 1.2% interest per month (14.4% per year).  These loans are short term, micro loans ranging from $1000 to $5000, with direct debits from the employees government salary, and insurance policies that cover the loan in the event of death or job loss of the borrower.

Unlike most of the rest of the world, Panama was not phased during the global financial crisis – not a single bank or credit union in Panama has failed while hundreds in the US and Europe did.  In fact, Panama’s economy grew at almost double digit growth over the last 7 years, and this year Panama is expected to have over 10% growth, thanks to a variety of micro and macro-economic factors, being the number 1 recipient in the region with over US$20 billion in direct foreign investment being spent on infrastructure including the Panama Canal expansion, maritime ports, free trade zone expansions, highways, toll roads, metro systems, oil pipelines, mining, power generation, and much more.

Currently, it is pretty hard to find a better place to park your capital than Panama, and there’s no better place than conservative savings and loan institutions like Panama Credit Unions, which offer the most competitive interest rates in the market.  Opening an account is simple, quick and easy. A Christmas CD at 8.33% in US Dollars is also a gift that you deserve to give yourself and your family.

Contact us today using the form below to learn more about the Panama credit union opportunities.