Panama has some of the safest most regulated banks in the world. The banking industry is a major industry in this country and the reserve requirements are very high. This is a link to the Superintendence of Banking in English, LINK . If you bank in a bank and it is not on this linked list it is not legal in Panama. You will not find any Credit Unions, Cooperativas on the list.
Panama does have some excellent Credit Cooperatives, Credit Unions. These Coops like the Cooperativa de servcios y professionals, CACSA , Coop EVE and others. Each has dedicated polities, such as teachers in the case of EVE.
These Cooperatives are regulated but not as much as banks. This article from La Estrella in 2011 points out concerns about the limited regulation.
“The regulation of cooperatives is an issue that has caused opinions among financial sector associations.
While some sectors apply stricter standards to regulate the cooperative sector, others consider it a matter already discussed and regulated.
DIFFERENCES
Mario de Diego, vice president of the Panama Banking Association, believes that ‘certain cooperatives’ should be under the supervision of the Superintendency of Banks, as dedicated to raising money from the public.
Similarly, De Diego explained that the banking law prohibits any person, directly or indirectly, accepting deposits from the public through the acceptance of money on deposit, except with banking license.
Meanwhile, Robert Haley, president of the National Association of Financial Institutions (ANIFI), has previously expressed that cooperatives have a competitive advantage on financial regulation and legislation for them to raise funds from the public and its partners, which generally, costs of funds are cheaper than the lines that receive financial funding.
MORE REGULATION
Cooperatives that provide services to others and come to accumulate much capital should be more regulated, because damage to the rest of the cooperatives that are smaller, said Antonio Ramos, manager of the Association of Professors of the University of Panama (APUDEP).”
Coops also called Credit Unions do pay a higher interest rates than banks to attract depositors and they will lend to people who are their members. Those who lend to public employees can easily garnish wages with a sequester to guarantee payments and generally deposits are secure.
Currently Panama’s Weekly Finance Paper reported that at least one Coop, the one being aggressively marketed to expats at our Tuesday Meetings has a possible problem. LINK
I am quoting a note I received in email this week.
“The financial newspaper in Panama (Capital Financiero) published a note this week saying that the government entity that oversees Savings and Loans Coop,s has just intervened COACECSS (which is the one being promoted by this group of Americans in Panama) because of an audit which showed the sustained non-compliance with the law that regulates them and the “financial and administrative deterioration of this Coop which jeopardizes the investments of the Coop”. ”
Since I suspect some people bought in to the 8.5% interest offered for CD’s. These accounts are not insured by anything and I would consider them high risk. The axiom is the higher the return, the higher the risk.
I posted this before on the Boquete Ning Forum and it’s maybe of some use to just mention it here again:
I bailed out a year ago (out of COACECSS), for personal reasons combined with a feeling of intransparency of that credit union.
I asked for an annual report because it may be interesting how they manage to pay up to 8% interest rate annually on higher amounts. To my understanding for giving small credits they at least would have to charge 8% to break even. Having a little surplus and being a little bit profitable would definitely need more interests as to what they’re willing to give you for your principal.
But asking is not always beneficial. So I wouldn’t get any answers other than ‘there was never a default of any credit union’, or ‘simply believe in them’ etc.
But what about something like an annual report of 2011?
I got into it by recommendation and trust. I bailed out by investigation (and the lack of answers to my questions) and a funny feeling. Call it a learning curve.
That’s just my experience with mentioned credit union. I’d love to see some public reporting of some actuality about how a credit union is refinancing itself (maybe even published in this forum, for it shouldn’t be a secret; a link would do it)…
IPACOOP has a mission statement. http://www.ipacoop.gob.pa/site/acera-de-ipacoop/antecedentes/
In additional to what one would expect from standard financial regulatory agencies, they define themselves as stewards of a movement. It’s no accident that the person they specifically mention by name as a pioneer is a saintly poet, sociologist and all-around champion of the rural interiorano.
More at: http://www.sociologiadeazuero.net/2008/06/ofelia-hooper-polo.html
If the resolution of this matter were to come down to the resolution of conflicting interests, it’s hard to imagine that the IPACOOP would put the holders of 8.5% CD holders first.
On July 4th, a meeting was held at the Credit Union in Panama City with Marta Luna Veliz, the lady that was appointed by IPACOOP on June 28th, and executive representatives of this group of Americans mentioned. The meeting was at the request of Marta Luna Veliz.
The reason for the meeting was to inform everyone as to why the IPACOOP deemed it necessary to effect this intervention. After a six month audit of the Credit Union, IPACOOP determined that there were corrections that needed to be effected in the accounting and loan departments of the credit union. If allowed to continue long term, it would effect the financial solvency of Credit Union.
The problems were, some incorrect calculations of interest. Non-members were getting a half a percent higher on CD’s than regular members which is against a ruling of the Credit Union which states that Cooperatives can provide services to others, but such services can not be made on terms more favorable than provided to its members. It was felt that the current rates for CD’s up to 8.5% were too high for long term solvency of the Credit Union and should be adjusted downwards.
The contractual situation between the Credit Union and this American group was discussed. There was complete compliance with all of the legal requirements in processing depositors introduced. IPACOOP have made recommendations and things should be getting back to normal very soon. Everyone appears to be in agreeance. The meeting was a constructive and happy one.
Until the necessary adjustments and corrections of the identified defects in the Credit Union accounting systems have been made, the group of Americans agreed not to bring any new depositors into the Credit Union to create new accounts. The Agreement between this group of Americans and the Credit Union would also be reviewed and mutually redefined.
With all of the misinformation being circulated by some irresponsible websites and blogs, it has been a confusing week for everyone involved. As usual, the credit union people are wonderful to work with, and helpful in every way. Members and non-members of Credit Unions in Panama are so fortunate to have an organization like IPACOOP looking after their interests.
To that end, you can be assured that these are some of the facts regarding Credit Union funds:
· This is an “Administrative Intervention” and as such by definition, in no way involved the immediate financial health or solvency of the Credit Union
· The credit union will continue to honor all interest payments in both certificates of deposit and Money Market savings accounts,
· The credit union has the solvency to pay all principal amounts of certificates of deposit when matured and if requested.
Clients funds are not in jeopardy. Hopefully, whatever needs correcting will be done soon, and things will return to normal. For this reason, a decision has been made by this group of Americans, to supply information on this situation on an “as asked” basis, rather than make a company statement.
All is well. And all was well, but needed a few minor adjustments. You are promised to be kept informed, and please keep in touch with us.
The Management
I have been criticized publicly and privately for posting this information.
Please understand my reason for posting this is because although it is public knowledge, it was public in Spanish in a finance publication. Because I am aware Jim is selling this “opportunity” Tuesdays, I am sure there are people who bought into the idea. It may be that all turns out well, but now people have at least some information saying there is risk. They are paying 8.5% plus paying a commission to Jim so their cost is even higher.
I know overall Coops in Panama are secure and you can get good rates, some others as high as 5%; no others i know are paying 8.5%. I you go into this enter with open eyes and awareness of the reality, not on hype. Jim has a vested interest in people not withdrawing funds. I have no interest in any financial institution in Panama.
The resolution JD/11/2012, by authorizing the intervention, indicated that the audit carried out”details an alarming deterioration of financial and administrative organization through this cooperative and that such circumstances pose a serious risk to the investments by the cooperative and therefore the money from partners and third parties. “
Sounds a little more serious to me than what your response admits. The words “serious risk” ring loud to me.
First of all, I appreciate the concern that you have for other people’s investments. I am sorry to hear that you have been criticized publicly and privately. I guess it comes with the territory of trying to help.
I have no vested interest in people withdrawing or not withdrawing funds. This group of Americans who set this up, won’t have to pay any finders fees back if people leave the program. Withdraw all you want. It’s your money. Invest it where you wish. Nobody is twisting any arms. The opportunity is in front of you, do your due diligence. Make sure that it’s for you. I’m just hoping to get enough brownie points to get an iPad one day. They look really cool. And I have my favourite charities.
I have explained the “Serious Risk” previously. Let me go over this again, in perhaps less complicated wording. Since this group of Americans put together a contract with the Credit Union to promote it to the English speaking populations in Panama, approximately $75 million dollars has changed hands. North Americans are no dummies when it comes to investing. They know a good deal when they see one. And by the way, only a small portion of those funds were raised by this group of Americans. The rest is collateral damage. Credit Union assets included $44 million at the end of 2009, $60 million at the end of 2010, and $103 million at the end of 2011. I saw a report a few months ago that showed $118 million. There are 12 locations now in Panama.
With this meteoric rise in the past two years, red flags were flying. Banks were complaining that they were losing clients and funds in large numbers. You have to think in relational terms. Banco Nacional may have 5 Billion in assets, the Credit Union has perhaps $120 million. It’s a big difference. But for a little Credit Union, it was time for Mr. Martinelli to ask IPACOOP to step in and have a look. There was a 6 month audit. We are now hearing the findings. I will be in Panama City for the next while, so if anyone seriously wants to keep in touch with what is going on with the proceedings, e-mail me at jim@offshorecdnetwork.com
First of all, IPACOOP are not ugly people like the IRS or other agencies who oversee financial institutions. They only want to help and make things right. They want to make certain that Credit Unions are doing good things with people’s money. They have up to 180 credit unions to be in charge of. The reasons that Credit Unions don’t fail is because of IPACOOP keeping an eye on them for you. Credit Unions left to their own devices and boards of directors can come up with some very interesting ideas for your money. IPACOOP, keep them in check and if a red flag appears, they are right there with the auditors. You should all be so very happy for IPACOOP. Here is the official notice:
June 28, 2012. Fulfilling the role of public oversight of cooperatives, the IPACOOP by authorization of its Board of Directors has decided to take temporary management of the Cooperative Savings and Credit Fund Employees Social Security, R. L. (COACECSS, RL), in order to protect the resources of its partners and third depositors and maintaining financial system stability in general.
Note, they say “PROTECT THE RESOURCES”
The board of directors of the Credit Union, gave their response:
“James Sturge, Chairman of the Board of Directors of COACECSS, upon receiving the notification, announced his willingness to work, addressing all recommendations made by the institution, said in an IPACOOP statement.”
IPACOOP’s response to Mr. Sturge’s statement:
“The IPACOOP reiterated its commitment to protect the funds of the cooperative and to ensure adherence to cooperative principles, values and laws that govern it”.
After going over the books with a fine tooth comb, IPACOOP concluded that if this Credit Union continued on this same path, it would pose a “serious risk” to the investments of the Cooperative. Imagine if you were a writer for a financial magazine and heard through the grapevine, this type of information. What a story!!! I talked to some of the manager folks of the Credit Union who were quite suprised that this financial magazine would print incorrect or misleading information.
I doubt that IPACOOP would hand over their audit findings to a financial magazine. IPACOOP are involved in audits, all day, every day. They have 180 credit unions to watch over. I will find out who wrote that story, and who supplied the information. I suspect that there will be a retraction or an explanation. It sounds like something leaked from someone, went to someone else, and it became a story filled with rumour, inuendo and half truths. People have said that they might expect something like that from La Prensa, but not the Financiero.
So the bottom line is: IPACOOP found that some clients were getting higher amounts of interest than they were supposed to get. That can pose a “serious risk” to the investments of the Cooperative if left unchecked. The calculations of interest have to be more accurate. Lots of internal things need fixing.
This group of Americans may no longer be able to advertise rates that are half a percent higher than regular Credit Union members receive. That could pose a “serious risk” to the investments of the Cooperative if not changed. Rates have to be re-calculated to protect the credit union in the long term.
This group of Americans have agreed to not bring any new clients to the Credit Union until new rates have been agreed upon by both parties. It’s a very amiable process. No one is in disagreement with what has to be done. It’s all very clear.
It will be a “serious risk” to the investments of the Cooperative if the recommendations that IPACOOP present, are not followed. And you can bet that the IPACOOP will be watching very closely. Expect that new account openings and CD deposits, will require more effort and paperwork. They just love their paperwork here
I started an account with this credit union just about the time it was gtting in trouble so I terminated the hope that I could deposit my SS benefit in my account. I only have $15.00 in it but what really pisses me off is that I have been trying to close it for two months. I have been getting the runaround the likes of which I have never seen after having been in Panama for two years. Today the David manager told me he couldn’t clos it because they have a new general manager. He refused to call her. I contacted the office in Panama and gave them a piece of my mind. I might even have gotten my $15.00 worth.