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PUERTO RICO’S CREDIT UNIONS

PUERTO RICO’S CREDIT UNIONS. Ana V. Ortiz Executive President COSSEC. TOTAL NUMBER OF CREDIT UNIONS OPERATING IN PUERTO RICO SUPERVISED AND INSURED BY COSSEC. Closed (Single Common Bond CU) 71 Open (Community CU) 69 TOTAL 140.

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PUERTO RICO’S CREDIT UNIONS

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  1. PUERTO RICO’S CREDIT UNIONS Ana V. Ortiz Executive President COSSEC

  2. TOTAL NUMBER OF CREDIT UNIONS OPERATING IN PUERTO RICO SUPERVISED AND INSURED BY COSSEC • Closed (Single Common Bond CU) 71 • Open (Community CU) 69 TOTAL 140

  3. REGULATOR AND INSURER • PUERTO RICO CREDIT UNION SUPERVISION AND INSURANCE CORPORATION (COSSEC, its Spanish acronym) • SHARES AND DEPOSITS INSURANCE UP TO $100,000 AGAINST INSOLVENCY RISK

  4. PUERTO RICO CREDIT UNION SUPERVISION AND INSURANCE CORPORATION • Board of Directors: - 4 Members from the Public Service Sector - 4 Members from de Cooperative Sector - 1 Member representing the Public Interest

  5. TOTAL ASSETS AS OF 3/31/04 Total Assets • $6,100 MILLIONS • SHARES : $4,400 MILLIONS • DEPOSITS : $1,300 MILLIONS TOTAL : $5,700 MILLIONS

  6. LOAN PORTFOLIO • $3,600 MILLIONS • DISTRIBUTION

  7. CREDIT UNIONS POWERS • Offer all kinds of depository services allowed to other financial institutions • Operate a trust department • Act as a fiduciary of individual retirement accounts (IRA) • Act as depository of public funds of any kind • Sell and trade insurance products, for this purpose, the credit union can set up a subsidiary, an affiliate or a cooperative company

  8. Credit Unions Powers • Create subsidiaries totally owned by them, to engage in activities permissible for a credit union • Organize or invest with other credit unions in financial services organizations

  9. Credit Unions Powers Limitations: Maximum investment: • 15% of Net Capital • 25% of the maximum investment (15% of net capital) in one company

  10. Credit Unions Powers • Invest in non-financial cooperative companies subject to regulatory limitations imposed by COSSEC • Issue preferred stocks with the previous approval of the Members Assembly • Issue capital notes with a 5 year or longer maturity, with the previous approval of COSSEC

  11. Credit Unions Powers • Grant all kinds of loans - There are no maturity limits - There are no limits to the maximum amount to be granted - There are no maximum interest rates

  12. CREDIT UNION LOAN POLICIES SHOULD INCLUDE • Adequate procedures, evaluation and risk measurement objectives according to the different types of loans, always taking into account protecting the public interest • Pricing policies or interest rates considering the different levels of credit risk • Rules applicable to collaterals

  13. Loan Policies • Commercial loans should be made in accordance with credit evaluation rules and procedures specially written for this type of loan. The credit union should designate commercial credit officials with the expertise and experience in the field

  14. COMMERCIAL LOANS LIMITATIONS • Credit unions are not allowed to grant a commercial loan to a legal person that operates a for profit business EXCEPTION: • Commercial loans to small and medium size businesses controlled by natural persons who are also members of a credit union

  15. Commercial Loans Limitations • Credit unions are allowed to grant loans for projects, economic sectors or activities with a high public interest or with a potential to generate new jobs • Commercial loans must be previously approved by COSSEC

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