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Cooperatives capture 25% of the financial system
Posted On 29 Aug 2018
Ecuadornews:
At least $ 145 million remains to be paid to 23,000 creditors of the 314 cooperatives closed between 2012 and 2017, according to data from the Superintendency of Popular and Solidarity Economy.
It is the main sequel to a cooperative process that experienced a boom between 2007 and 2012, and then deflated when the control body detected irregularities such as poor governance among administrators, concealment and adulteration of information, corruption, internal fraud and even nepotism.
This is explained by the Superintendency, which entered to regulate the sector in 2012. 94% of depositors have been paid, but there are factors that hinder the cancellation of the rest: poor quality of the portfolio, high risk and irrecoverable, prohibition of alienation of goods; Furniture and vehicles from several closed cooperatives do not represent a significant percentage and have high deterioration. And for the recovery of portfolio there are embargoes to the debtors, but they take time.
According to the Superintendency, there is now a moratorium for the creation of savings and credit cooperatives, but a lesson to take into account after what happened with the cooperative sector is that if you want to encourage the growth of a sector at the same time there must be an organization of control, not as it happened with the savings and credit cooperatives that first grew and then there was a control entity.
A study by Cordes in March 2018, focusing on the largest cooperatives (segments 1 and 2), indicates that the boom of the cooperatives occurred between 2006 and 2012 – during that time they grew from 484 to 981-. After the creation of the Superintendence of Popular and Solidarity Economy, the controls led to a series of mergers and liquidations. For 2017 they were in 686.
The growth also occurred in their participation in the financial market. According to the study by Cordes, in January 2006 cooperatives represented 10.4% of the total deposits of the financial system, but in December 2017 they rose to 26.2%. That is, they went from $ 535 million to $ 6,848 million, multiplied by 12. On the credit side, in January 2006 cooperatives accounted for 8.2% of placements in the financial system, while at the end of 2017 they arrived to 18.5%, that is, they went from $ 635 million to $ 6,440 million (they grew ten times).
A behavior that caught the attention of Cordes is that between January and July 2015 there was a strong contraction of deposits in banks due to the drop in the price of crude oil, but the same did not happen in cooperatives. Rather there was a slight recovery.
The reason why the level of deposits has not decreased is explained by the Superintendency due to the profile of depositors: in banking the largest depositors are companies, and in the popular and solidary system they are natural persons and there term deposits are more than 60% and in banks are 33% that may also have influenced. (I)
Economic sector
Popular and supportive
Entities
There are 645 entities in the financial sector and 13,206 in the non-financial sector. The Superintendency of Popular and Solidarity Economy controls 40 that were supervised by the Banks and 970 by the Directorate of Cooperatives of the Ministry of Economic and Social Inclusion.
Closing
At the beginning of the liquidation of 314 cooperatives, they had 415,996 creditors and $ 285 million deposits. (I)
