Expat and local depositors hung out to dry as $95 million Coop liquidates

Thousands of depositors, in Panama’s fifth biggest Cooperative (Credit Union) may have to wait up to two years to access their savings, and receive no interest.

A settlement order was issued to Coacecss March 21 by the Panama Autonomous Cooperative Institute (IPACOOP) after the refusal of a proposed reorganization and financing presented to the board by various cooperative associations.
In June 2012 IPACOOP detected a "financial deterioration" in its management, including paying high commissions for referring clients.
Coacecss opened its doors 46 years ago with just 20 employees and contributions of 50 cents.
When the settlement order was issued in March, it had 14,975 Associates, a loan portfolio valued at $83 million and about $ 95 million in deposits from savers, including many foreign residents.
The uncertainty for depositors began in June last year, when the Panamanian (IPACOOP), entity that governs these financial institutions, said a statement by the company after reporting a "deteriorating financial and administrative" in it.
Savers, both foreign and local, have expressed concern about the situation, as they have had limited access to their funds, which in some cases are urgently needed.
According to Law 17 of 1997, which regulates cooperatives, in the order of priorities are first settlement expenses proper process, wages and benefits, investment certificates and finally the return of contributions of partners.
The cooperative would have used deposits to fund a broad portfolio of loans whose default is reported at 33% says La Prensa .
The cooperative, according IPACOOP, would be paying better interest rates to others than it paid to its partners, thus failing to Act 17 of 1997", which regulates this market, reports La Prensa.