Panama Moves to Close Banco Hipotecario Nacional After Its Loan Book Failed

Panama's government has decided to close Banco Hipotecario Nacional, a state housing bank, due to its failing loan book. The Council of Ministers has approved a draft law on 26 May 2026 that outlines the progressive closure of the bank. The loan book of Banco Hipotecario Nacional is almost entirely unpaid, with about 94% of its credit portfolio classified as non-performing. This means that almost no borrowers are making payments, rendering the bank unsustainable.

The closure plan involves transferring the bank's functions to other state bodies, including the Ministry of Housing and Territorial Planning (MIVIOT) and the Caja de Ahorros, the state savings bank. A new national housing fund will be established within the housing policy structure to continue housing support despite the closure.

A transition committee, comprising representatives from the finance ministry, MIVIOT, the Caja de Ahorros, and the comptroller general, will oversee the process. The final liquidation of the bank is scheduled for 31 December 2027.

Banco Hipotecario Nacional's primary purpose is to finance national housing programs and low-cost social housing, as mandated by article 113 of Panama's constitution. Its borrowers mainly consist of low-income households and social housing programs. The failure of the bank's loan book directly impacts the most vulnerable Panamanian citizens.

In response to the closure, the government has defended the decision as a move towards a more modern and sustainable housing system. However, the exact steps of the transition plan remain to be detailed. The bill, numbered 1-26, now awaits approval from the National Assembly before it can be implemented.