Cossec: Co-ops Ready to Face Moratorium, Soften its Blow
The Cooperatives Supervision and Insurance Corp. (Cossec by its Spanish acronym) is working alongside the island’s state-chartered credit unions or co-ops to find alternatives and solutions to mitigate the effects of the debt moratorium act signed Wednesday by Gov. Alejandro García Padilla, which could impair their financial health, Executive President Daniel Rodríguez Collazo said Thursday.
According to Collazo, some of the strategies the agency is undertaking include meetings with co-ops’ leaders and representatives, economists and finance experts who can shed light on how to mitigate the measures taken by the government of Puerto Rico.
The Cossec top executive asked co-op members to dismiss speculations and place their trust in the solvency, liquidity and strength of what he described as one of the island’s safest economic sectors.
“There’s a lot of anxiety. First, we must point out that the best mitigating factor that savings & loans co-ops can have is their capital and solid liquidity,” Rodríguez Collazo indicated. “Secondly, the reserves that these institutions are required to have by law to face any crisis, default, or economic challenge serve as attenuators to any adverse effect that may arise in the process. Let’s be clear: co-ops are not brokerage firms. Co-ops have a very profitable and diversified operation, with a loans portfolio in excess of $4.6 billion, assets that surpass $8.6 billion and a membership that represents one of every four Puerto Ricans.”
The Cossec executive president said the island’s co-operative movement has genuine concerns, like any other economic sector, and that is why it is joining efforts with regulators to find solutions to guarantee the sector’s growth and continue strengthening the co-ops’ economy.
“I must be categorical in saying that co-ops have the capital to lessen the blow of any default or moratorium as a result of Puerto Rico’s fiscal situation. As a matter of fact, these have a combined capital of more than $2.6 billion and $1.6 billion in liquidity,” Rodríguez Collazo said.
As of Dec. 31, 2015, the island’s savings & loans co-ops had 966,274 members (24,242 more than same time the previous year), $8.5 billion in assets, $4.6 billion in loans, $5.78 billion in deposits, $2.35 billion in shares, $2.6 billion in capital and a delinquency rate average of 5%, the Cossec executive president indicated.