The Corporation for the Supervision and Insurance of Puerto Rico Cooperatives, known as COSSEC in Spanish, has adopted a new policy of modernization, innovation and technology to facilitate information between co-ops and the government, President Daniel Rodríguez-Collazo said Thursday.
Furthermore, the corporation will be expanding its investment policy to provide co-ops with “real tools and alternatives” when investing their capital and excess liquidity, he said.
The initiatives are part of COSSEC’s work plan that calls for working together with Puerto Rico’s co-op movement, to draft strategies to ensure the sector’s “continued rally, competitiveness, strength and liquidity,” he said.
“The new modernization plan not only equips [COSSEC] with innovative technologies to more effectively address the island’s cooperative sector, but also tempers and offers cooperatives renovated techniques and strategies, as well as important tools necessary for this sector,” he said. “This is how we can achieve a firmer economic base and the positioning of our cooperative product among the most trusted local and regional financial institutions.”
The strategy will optimize the monitoring of co-op performance, financial data and statistics by providing a mechanism for direct electronic exchange between COSSEC’a information systems and co-ops. Furthermore, it provides the capability to modernize co-ops and increase their competitiveness in relation to other financial institutions, Rodríguez-Collazo said.
Currently, the process of sending quarterly financial reports by co-ops to COSSEC is done through the website, but there is no mechanism for exchanging information between electronic systems directly. The new initiative contemplates doing this work automatically, ensuring the integrity of information submitted to COSSEC, corroborating in a reliable way, the financial condition of Puerto Rico’s cooperatives.
“According to our analysis, the implementation of this automated system represents savings in operating costs for co-ops in the preparation of reports, reduces possible errors in the information entered into COSSEC’s systems, and prevents time-consuming and costly reviews by COSSEC,” Rodríguez-Collazo said, adding the savings will exceed $500,000 a year for co-ops once the project is implemented.
Expansion of investment policy
Meanwhile, the COSSEC chief also said the agency will be expanding its investment policy starting this week, providing tools and alternatives for co-ops looking to invest their excess liquidity.
“Island co-ops have shown unprecedented sustained growth, meaning that, in the most part, credit unions have the necessary liquidity and solvency to allow relaxation of investment criteria,” he said. “That’s why we have decided to adopt a statute allowing new instruments to be included in co-op investment portfolios. This administrative proposal aims to enable island co-ops to continue growing and developing a healthy investment portfolio to ensure the distribution of dividends at the end of the year.”
At present, co-ops must abide by investment policies set forth by Law 255, which outlines what is allowed when it comes to the types of instruments that can be used. The law dates to 2002.
Starting this week, COSSEC is adding “Life Settlement” investments among the investment tools that co-ops may tap into to grow their bottom lines, he said.
As of Mar. 31, 2014, Puerto Rico’s credit unions had some $1.86 billion in cash and cash-equivalents placed in regular accounts, savings accounts and short-term savings certificates. This amount represents approximately 22.05 percent of total reported assets by co-ops as of that date.
Moreover, the sector held investments in marketable securities of $1.48 billion. This amount represents approximately 19.04 percent of total assets as of the same date. All investment assets are in traditional investment assets, mostly debt instruments (bonds).