Mutuals in Costa Rica are now able to raise capital  

A law has been approved to modernize sources of capital for mutuals, allowing the collection of third-party investments.

Thursday, December 12, 2013

Until now far mutuals could only turn to the accumulation of profits in order to have capital formation.

The Act to modernize sources of capitalization for mutuals establishes that these entities may obtain financing through mutual participation fees, this mechanism will allow them to capture third-party resources who have no control over the mutuals, only economic rights.

Mutuals may issue registered shares or participation shares for an amount of up to 50 % of their total assets . " ... Those shares will have the same characteristics of the values ​​according to the Commercial Code and the Law Regulating the Market and will not have the state guarantee or collateral with the Banco Hipotecario de la Vivienda( Banhvi)" reported

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Costa Rica: Financial Cooperatives up to June 2017

August 2017

In the second quarter of 2017, three entities accounted for 61% of the assets of the cooperative system, which represents 11% of the assets of the Costa Rican financial system.

From a report by Fitch Ratings :

Concentration of Business Model: The cooperative sector has moderate participation and accounts for 11% of assets in the national financial system. The participation of entities rated by Fitch Ratings (Coopenae, Coopeservidores and Coopeande No.1) has remained high and relatively stable in relation to the regulated cooperative system, accounting for 61.3% of the sector's assets. The business model continues to focus on consumer credit for its associates, mostly low- and middle-income public sector employees. Fitch believes that cooperatives face the challenge of diversifying products in their portfolio to reduce concentration risk in the consumer segment, which is typically more vulnerable to the business cycle. 

Financial Cooperatives in Costa Rica

August 2016

In the second quarter of 2016 three entities accounted for 63% of the assets of the cooperative system, which accounts for 10% of the Costa Rican financial system.  

From a report by Fitch Ratings:

Cooperatives in Costa Rica: Defaults and Pressured Profitability

Concentration of Business Model: The cooperatives rated by Fitch Ratings (Coopenae, Coopeservidores and Coopeande 1) are the three largest in Costa Rica and account for 63.3% of the assets of the cooperative system, a sector that still has a low participation in the national financial system (10.6%). These entities have a business model focused on consumer finance for its members, which makes them dependent on the behavior of a single segment.

El Salvador: Savings Cooperatives Growing

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Between 2006 and 2013 the number of agencies in the network of cooperatives in the country doubled.

Salvadoran Credit Unions have experienced a significant increase in the last year in order to expand financial services in most areas of the country.

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Subordinated Debt Law in Costa Rica

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This type of security, with a higher risk than traditional debt issues, pays last in case the company goes bankrupt.

Private banks were already allowed to issue such bonds, the new law now authorizes the state to do so.