• Email: jencomendero@yahoo.es



By: Arnold Encomendero Dávalos

Scholars generally agree that the global financial crisis, with all the turmoil it caused, has left SIGNIFICANT LESSONS we should learn well so as to eliminate them from the process of financial intermediation. In this sense, the State should not leave the role of Regulation and Supervision of Financial Markets unhindered. Self-regulation nor self-monitoring has been an expression of transparency. Moral Hazard. Asymmetric information and multiple market failures are the main causes of the current financial crisis. The truth is that all the bad practices of financial institutions should be avoided by implementing Integrated Risk Management to the extent of the technical and financial requirements of the Basel Accords committing each State and specifically the Superintendence of Financial Institutions, in their capacity as regulators and supervisors while considering the rigorous implementation of the Money Laundering and Terrorist Financing Prevention System. A study by PWC and IE BUSINESS SCHOOL of January 2014 quite rightly pinpoints that «financial institutions must not become complacent and must always be alert to capture and overcome new threats on the Financial Sector».

On this regard, according to results of a study sponsored by Felaban in April 2014, there are Seven Key Trends for financial institutions to position themselves competitively in the still stormy backdrop of the financial crisis such as: the complex, changing, and turbulent macroeconomic environment. The new regulatory framework. Integrated Risk Management. Demographic Change. Changing Consumer Behavior. Technology and Innovation. Indeed, these powerful trends condemn financial companies to reinvent themselves; to play a more proactive and transformative Role considering the cascade of changes occurring in the market generated by the global Financial Crisis. Precisely, when Luis Maldonado presented the detailed study conducted by PWC and E IE Business School noted: «International authorities such as the Basel Accords, in order to toughen conditions for Capital and require banks to have better levels of transparency and consumer protection, have launched about thirty regulatory reform projects such as Basel III under the motto: «We are all hazards». Furthermore, he stressed, «innovation and technology are factors that will act as catalysts for change in the Financial Sector of the Region». All this, he concluded, in order to «consecrate customer at the heart of the financial business and adopt a more efficient operating model.»

What do Basel I, II, and III rules require of Financial Institutions?

Within this context, Financial Institutions face new regulatory measures passed by the Superintendencies of Banks and Financial Institutions as long as they CAPTURE DEPOSITS for Available and Term Savings in any form against any self-supervision model- not transparent or technically consistent to fulfill such role, to fulfill this important role, they focus on taking the precautionary, and really effective, measure to counter the crisis. In this sense, Increase Liquidity. Increase placements with good credit rating. Reduce Operating and Financial Costs. Access Innovation and State-of-the-Art Technology. Increase Effective Equity as per Basel III Rules. Capitalize Profit (remaining) to fund internal resources, and to have good intellectual capital to professionalize management. What role do Credit and Savings Unions have in this Process Transformation of Financial Institutions tailored to the Basel Accords?

The Summit of Cooperatives held in Canada in 2012 as a result of a Study carried out by the DELOITTE Consulting Firm regarding Cooperative Funding and Financial Capital, made the following FIVE RECOMMENDATIONS:

1. «Review capital requirements to ensure sustained increase in funding»
2. «Assess historical financing and capitalization strategies to determine their suitability for meeting future needs»
3. «Expand the range of financing tools to diversify the sources of capital with actual capitalization plans (50% minimum) with adequate consideration of internal and external investors to meet capital requirements and risk management»
4. «Educate members and investors on the implications of internal versus external funding strategies»
5. «Strengthen governance processes with respect to cooperative strategy, risk profile, and operations»

But to what extent have the Credit Unions implemented efficiently and effectively these wise and prudent recommendations?

We recognize that Important Declarations have been adopted in order to highlight the Cooperative Values and Cooperative contribution to human and social development but the Crisis continues to affect the international financial Cooperatives as well as other companies that are facing problems with high Delinquency and deficit results, according to their Financial Statements?


COOPETROPERU is a Peru Credit Union (Cooperativa de Ahorro y Credito del Peru) which was affiliated with the ICA, now COOP. AMERICAS, for over FIFTEEN years, between 1994 and 2005 and the author of this article carried out a number of researches on International Financial Cooperatives which were published in ELEVEN issues of the «Cooperatives of the Americas» International Journal and in the books «Reasons for Implementing Cooperatives» (“La Razón Cooperativa”), and «Market Economy and the Challenge of Cooperative Values» (“La Economía de Mercado y el Desafío de los Valores Cooperativos”), and a number of articles through the WEBSITE www.arnoldencomendero.com; however, acting in his capacity as General Manager of COOPETROPERU and based on his professional applied research, he was the mastermind and technical thinker of the «LIDERPLAN» Planning System which is a methodology that maps the five-year Strategic Plan with the Annual Operating Plan, Budget of Revenues and Expenditures, and a Performance Measurement Model with Economic and Financial Performance Indicators, supplemented with a Strategic Development Pact signed by the Directors and Executives who agree to comply with certain five-year Plan to make timely adjustments based on the Situation. But, he also managed an Information Technology Project which allowed to design, implement, and optimize a Comprehensive Financial Software called «PETROSIS» System registered with INDECOPI-PERU, where COOPETRPERU has been recognized as the holder of the Intellectual Property and Trademark of PETROSIS. This software was developed in the ORACLE Database with Programming Language: Power Builder and the «Dot Net» System through the Query Web having as a distinctive feature that has fully automated the Operations according to the Accounting Handbook approved by the Banking Superintendence of Peru and all regulatory standards established for a Peruvian financial institution, including Integrated Risk Management and Asset Laundering and Terrorism Financing Prevention System using real-time Management Information System (GIS) consisting of 174 reports issued by the Integrated Financial Software «PETROSIS». With these TWO tools strategic and financial management tools, COOPETROPERU has accomplished the following:

a) Between 2010 and 2014, COOPETROPERU increased Deposits from its partners by 212%. Loans increased by 82%, and total assets increased by 131%.

b) In the same period, 2010/2014, COOPETROPERU surpassed Basel III standards (Table 1) with the following indicators:

• The main pillar of Basel III requires a Net Worth of total assets of not less than 20%: COOPETROPERU in this period achieved 22%.

• The liquidity buffer without outside help must be sufficient to overcome any situation. COOPETROPERU, as of December 2014, reached 51% of Available versus Deposits, which is also higher than the 20% required minimum.

• The financial statements must have a Care Business through the Social Capital indicator plus the Cooperative Reserve on Risk-weighted assets. According to Basel III, this should be NO LESS than 7%. COOPETROPERU, as of December 2014, reached 43%.

• The Leverage Ratio of Financial Statements should be less than 3%. COOPETROPERU, as of December 2014, reached 2.29% and the requirement in Peru is not more than 7 times.

What other indicators did COOPETROPERU achieve in 2013-2014 to be a financial institution with Value Innovation and a Financial Institution that is VERY PROTECTIVE OF DEPOSITS OF ITS PARTNERS?

By simply looking at TABLE 2, we can verify that the level of economic performance achieved by COOPETROPERU is highly reliable, sound, and consistent, as evidenced with its qualitative and quantitative results of its liquidity ratios. Low Delinquency rate of 1.51% as of 31.Dec.2013, and 1.16% as of December 2014. Good portfolio protection with 205% and 255% higher than the 130% required. With a very reliable level of efficiency since it has low administrative costs in relations to Total Assets, i.e. 2.08% in 2013 and 2.02% in 2014. And low leverage with 2.40% and 2.29% respectively in December 2013 and 2014 far below the ceiling of 7 times. These figures speak louder than words. The truth is what it is!
As a corollary to the strength, solvency, and administrative and management responsibility in having a liquid, solvent, and highly productive Financial Company in attracting Deposits and placing loans by its employee, the following question arises: What are the strategic pillars that helped COOPETROPERU achieve such outstanding sustained and sustainable economic financial results?

Let’s learn about the SEVEN fundamental pillars that have served to make this a Cooperative Enterprise a Cooperative Financial Management Model that complies with the Basel Accords I, II and III requirements.

1. Having a Comprehensive Plan making Transparent and Responsible Management with Finance and Credit discipline visible.

2. Creating products and services with added value for our partners by giving a human face to Financial Intermediation.

3. Promoting and ensuring Real Efficiency in expenditure and operating costs sustained over time.

4. Automating transactions using a Financial Software applied and optimized with the latest Technology.

5. Promoting and implementing Innovation in Business Model processes and products.

6. Applying Comprehensive Risk Management to the measure sustained and sustainable development correlating them with short and long terms.

7. Having an ideal Financial Management and highly trained human capital.

8.- Contar con una Gerencia Financiera idónea y un Capital humano altamente capacitado.


1. «Decoding the Future: Transforming the Latin American Banking». PwC and IE. Business School
2. «Director of PwC and IE BS Financial Center. Gestion newspaper 22.Apr.2014»
3. 2014 COOPETROPERU.JAED Risk Management Report. General Management. February 2015.
4. Basel Accords. Internet. Google

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