Financial Uncertainty for Over 5,000 Coopeservidores Savers Amidst Credit Portfolio Deterioration
5,111 savers face potential loss of funds as Coopeservidores' credit portfolio struggles to be sold, with five failed attempts to date.
A total of 5,111 savers, comprising both individuals and solidarity associations, associated with Coopeservidores, are at risk of losing their funds due to the potential deterioration of the cooperative's credit portfolio, which remains under its management.
This risk could materialize if the administrator of the cooperative fails to successfully negotiate the sale of its credit assets to another financial entity.
To date, five attempts to sell these assets have been unsuccessful.
Income from repayments on these loans is crucial for fulfilling obligations to both savers and creditors.
Investors who are at risk include those with deposits exceeding ¢6 million at the time of the cooperative's closure.
These savers have already recovered 50% of their money, yet the other half remains at risk.
Among them are individual savers and approximately 200 solidarity associations representing around 140,000 affiliated members.
These associations had about $125 million invested in financial instruments from Coopeservidores, including time deposits and savings deposits, with the recovery of $65 million still uncertain.
As of November 2024, the cooperative reported nearly ¢55,000 million in active credit portfolios, consisting of 6,158 loans.
This information is included in a letter (PDC-0024-2025) sent to investors holding unsecured deposits on January 29, which was signed by Humberto Grant, President of the National Supervisory Council of the Financial System (Conassif), and Marco Hernández, the cooperative's administrator.
The resolution team has until June 21 to negotiate the sale of the credits or to consolidate a trust that will manage both good and bad assets still under their administration.
Failure to arrange a sale will result in the credits entering a bankruptcy process.
The letter acknowledges that as of now, it is very likely that the bankruptcy process will delay any payments to creditors, whether secured or unsecured, due to the complexity of the procedural requirements involved.
The Resolution Administration is working to establish a trust for what is termed a ‘bad bank,’ incorporating unsold assets.
The payment compliance of borrowers is essential for savers and creditors to receive returns on their investments.
Carlos Fernández and Bernardo Alfaro, former executives of the Bank of Costa Rica (BCR) and the National Bank (BN), concurred that without selling the credit portfolio or transferring it to a trust that would facilitate a sale, the value of the portfolio is likely to deteriorate, leading to borrower defaults.
Alfaro indicated that stagnant portfolios that do not issue new credits are bound to deteriorate irreversibly as time passes, where borrowers may face job losses, bankruptcy, or even death.
As of November 2024, Coopeservidores reported public obligations totaling ¢232.194 million and ¢8.149 million to financial creditors.
It should be noted that Banco Popular has assumed a part of the entity's liabilities.
Currently, no additional plans for distributing extra funds to unsecured investors have been outlined, as various issues remain that hinder the determination of feasibility, as recognized in the letter sent to unsecured investors.
Francisco Ruiz, an investor leading a group of Coopeservidores' investors, expressed dissatisfaction with the pace of the resolution process, describing it as slow and passive.
He stated that they are hopeful for a third party to acquire the portfolio or at least for it to be integrated into a trust.
Guido Monge, Executive Vice President of the Costa Rican Solidarity Movement (MSC), mentioned that they have closely monitored the resolution of Coopeservidores, particularly regarding the unsold portfolio and the lack of consolidation of the trust.
He expressed concern that, as time progresses, a portion of the portfolio may deteriorate if an effective strategy is not defined soon.
On February 4, 2025, La Nación reached out to the Coopeservidores Resolution Administration for comment but did not receive a reply by publication time.
Coopeservidores was intervened on May 13, 2024, due to irregularities in management and alleged financial data manipulation.
The cooperative was declared unviable on June 21 of the previous year, initiating a resolution process.
Ernesto Solano, a lawyer from the Financial Consumer Office (OCF), noted that the judicial process for bankruptcy is complex, and the Bankruptcy Court is currently handling other cases, which complicates the speed of recovering funds.
Former bankers indicated that such processes could further deteriorate those loans that are currently performing.
As of now, no offers have been accepted by Conassif, which is responsible for endorsement.
Without the establishment of this trust, all unsold assets will devolve into bankruptcy proceedings.
The document sent to investors indicated that several financial institutions were invited to offer their services as trustees, but only one expressed interest in submitting a proposal.
The trust, which will eventually oversee the residual bank of the entity, will be tasked with managing the remaining portfolio for better collection management and market sale prospects.
The aim is to secure a reasonable price for these assets.
The document also stated that the credit portfolio suitable for recovery and those deemed doubtful require deep strategic management to ensure adequate collection practices.
Marco Hernández's team anticipates finalizing the trust in the first quarter of 2025, having previously announced.
The resolution process is limited to a one-year duration as stipulated in Article 139 bis of the Organic Law of the Central Bank of Costa Rica.
Thirty days before this period concludes, the transition of the residual entity must be instructed for bankruptcy proceedings, regardless of the trust's status.
As of November, the credit portfolio of Coopeservidores has exhibited deterioration based on the latest figures from the Superintendency General of Financial Institutions (Sugef) as of May 2024. That month, overdue loans exceeding 90 days and undergoing judicial collection totaled ¢66.473 million.
By November, this amount had escalated to ¢210.534 million.
Additionally, Coopeservidores managed a total credit balance of ¢285.140 million.
As of November, only 19.28% of the portfolio under its administration was up to date (¢54.982 million), while 6.88% (¢19.623 million) was overdue but less than 90 days.
During the initial months of 2024, delinquencies at Coopeservidores increased significantly, closing at 11.66% of its portfolio according to the latest figures published by Sugef.
The cooperative was intervened partly due to the deterioration of its credit portfolio.
The majority (77.5%) of the loans administered by Coopeservidores were consumer-related activities, with a balance of ¢221.009 million by November.
The second highest category was for housing loans, amounting to ¢37.049 million.
Most remaining operations (90.58%) lack guarantees, with only 4,117 out of 43,625 loans secured by collateral, whether through a mortgage, fiduciary agreement, or pledge.
This risk could materialize if the administrator of the cooperative fails to successfully negotiate the sale of its credit assets to another financial entity.
To date, five attempts to sell these assets have been unsuccessful.
Income from repayments on these loans is crucial for fulfilling obligations to both savers and creditors.
Investors who are at risk include those with deposits exceeding ¢6 million at the time of the cooperative's closure.
These savers have already recovered 50% of their money, yet the other half remains at risk.
Among them are individual savers and approximately 200 solidarity associations representing around 140,000 affiliated members.
These associations had about $125 million invested in financial instruments from Coopeservidores, including time deposits and savings deposits, with the recovery of $65 million still uncertain.
As of November 2024, the cooperative reported nearly ¢55,000 million in active credit portfolios, consisting of 6,158 loans.
This information is included in a letter (PDC-0024-2025) sent to investors holding unsecured deposits on January 29, which was signed by Humberto Grant, President of the National Supervisory Council of the Financial System (Conassif), and Marco Hernández, the cooperative's administrator.
The resolution team has until June 21 to negotiate the sale of the credits or to consolidate a trust that will manage both good and bad assets still under their administration.
Failure to arrange a sale will result in the credits entering a bankruptcy process.
The letter acknowledges that as of now, it is very likely that the bankruptcy process will delay any payments to creditors, whether secured or unsecured, due to the complexity of the procedural requirements involved.
The Resolution Administration is working to establish a trust for what is termed a ‘bad bank,’ incorporating unsold assets.
The payment compliance of borrowers is essential for savers and creditors to receive returns on their investments.
Carlos Fernández and Bernardo Alfaro, former executives of the Bank of Costa Rica (BCR) and the National Bank (BN), concurred that without selling the credit portfolio or transferring it to a trust that would facilitate a sale, the value of the portfolio is likely to deteriorate, leading to borrower defaults.
Alfaro indicated that stagnant portfolios that do not issue new credits are bound to deteriorate irreversibly as time passes, where borrowers may face job losses, bankruptcy, or even death.
As of November 2024, Coopeservidores reported public obligations totaling ¢232.194 million and ¢8.149 million to financial creditors.
It should be noted that Banco Popular has assumed a part of the entity's liabilities.
Currently, no additional plans for distributing extra funds to unsecured investors have been outlined, as various issues remain that hinder the determination of feasibility, as recognized in the letter sent to unsecured investors.
Francisco Ruiz, an investor leading a group of Coopeservidores' investors, expressed dissatisfaction with the pace of the resolution process, describing it as slow and passive.
He stated that they are hopeful for a third party to acquire the portfolio or at least for it to be integrated into a trust.
Guido Monge, Executive Vice President of the Costa Rican Solidarity Movement (MSC), mentioned that they have closely monitored the resolution of Coopeservidores, particularly regarding the unsold portfolio and the lack of consolidation of the trust.
He expressed concern that, as time progresses, a portion of the portfolio may deteriorate if an effective strategy is not defined soon.
On February 4, 2025, La Nación reached out to the Coopeservidores Resolution Administration for comment but did not receive a reply by publication time.
Coopeservidores was intervened on May 13, 2024, due to irregularities in management and alleged financial data manipulation.
The cooperative was declared unviable on June 21 of the previous year, initiating a resolution process.
Ernesto Solano, a lawyer from the Financial Consumer Office (OCF), noted that the judicial process for bankruptcy is complex, and the Bankruptcy Court is currently handling other cases, which complicates the speed of recovering funds.
Former bankers indicated that such processes could further deteriorate those loans that are currently performing.
As of now, no offers have been accepted by Conassif, which is responsible for endorsement.
Without the establishment of this trust, all unsold assets will devolve into bankruptcy proceedings.
The document sent to investors indicated that several financial institutions were invited to offer their services as trustees, but only one expressed interest in submitting a proposal.
The trust, which will eventually oversee the residual bank of the entity, will be tasked with managing the remaining portfolio for better collection management and market sale prospects.
The aim is to secure a reasonable price for these assets.
The document also stated that the credit portfolio suitable for recovery and those deemed doubtful require deep strategic management to ensure adequate collection practices.
Marco Hernández's team anticipates finalizing the trust in the first quarter of 2025, having previously announced.
The resolution process is limited to a one-year duration as stipulated in Article 139 bis of the Organic Law of the Central Bank of Costa Rica.
Thirty days before this period concludes, the transition of the residual entity must be instructed for bankruptcy proceedings, regardless of the trust's status.
As of November, the credit portfolio of Coopeservidores has exhibited deterioration based on the latest figures from the Superintendency General of Financial Institutions (Sugef) as of May 2024. That month, overdue loans exceeding 90 days and undergoing judicial collection totaled ¢66.473 million.
By November, this amount had escalated to ¢210.534 million.
Additionally, Coopeservidores managed a total credit balance of ¢285.140 million.
As of November, only 19.28% of the portfolio under its administration was up to date (¢54.982 million), while 6.88% (¢19.623 million) was overdue but less than 90 days.
During the initial months of 2024, delinquencies at Coopeservidores increased significantly, closing at 11.66% of its portfolio according to the latest figures published by Sugef.
The cooperative was intervened partly due to the deterioration of its credit portfolio.
The majority (77.5%) of the loans administered by Coopeservidores were consumer-related activities, with a balance of ¢221.009 million by November.
The second highest category was for housing loans, amounting to ¢37.049 million.
Most remaining operations (90.58%) lack guarantees, with only 4,117 out of 43,625 loans secured by collateral, whether through a mortgage, fiduciary agreement, or pledge.
