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Solidarity with Salvadorians: FEDECRÉDITO Covid-19 response

Solidarity with Salvadorians: FEDECRÉDITO Covid-19 response

Macario Armando Rosales Rosa,
Chairman and Chief Executive Officer, FEDECRÉDITO


​​BRUSSELS, 31 August 2020 – The Covid-19 pandemic has hit the entire world with devastating effects. Back in May and June as the tide was already falling in Europe, some countries in Central and South America had become the new epicentre. In El Salvador, the increase in daily cases coincided with Tropical Storms Amanda and Cristobal that affected almost 150,000 Salvadorians.​​​

WSBI-ESBG sits down with Macario Armando Rosales Rosa, Chairman and CEO of WSBI member FEDECRÉDITO in El Salvador, to talk about the effects of the coronavirus and the bank's response to the pandemic and natural disaster that struck El Salvador.

How did the Covid-19 pandemic affect FEDECRÉDITO's customers; do you see any changes in the demand for certain services or products?

Confinement following the Covid-19​ outbreak reduced economic activity, and the slow reopening of commercial activities resulted in a decrease in new credits and the use of credit cards. Due to the restrictions in April and May, there was a decrease in transactions carried out through FEDE RED 365 ATMs and CNB's Non-Banking Correspondents. However, during the same period, we witnessed an increase in the use of our online channels FEDE MÓVIL and FEDE BANKING, as well as an increase in deposits from companies and customers. This clearly shows the confidence they have in SISTEMA FEDECRÉDITO.

Another change we can point out is related to family remittances, mainly coming from the United States. Initially, we saw a sharp fall in remittances in April with a recovery in July at higher levels than those in 2019.


Could you provide some numbers or statistics illustrating these changes?

With regard to the demand for products and services through our digital channels, we noted a considerable growth in transactions (127% via mobile banking and 27% via internet banking) and volumes (150% via mobile and 30% via the Internet).

Due to lockdown, the cash dispensed by our network of FEDE RED 365 ATMs was affected in March, April and May. Despite showing an increase over the previous year, we observed a decrease compared to February of this year. However, in June figures grew by 25% over the previous month – the highest amount dispensed recorded this year.

Our FEDE PUNTO VECINO non-banking correspondents experienced a downward impact, as a quarter of them had to close in April and May due to the restrictions on commercial transactions. Fortunately, in June there was a year-on-year increase of 0.30% in transactions and 70 % in the amount. This results from the amounts paid in family remittances via this channel.

A decrease in the flows of remittances was also registered during the month of April 2020, both at a national level and for SISTEMA FEDECRÉDITO, which saw a downward trend of 40% compared to the same period in the previous year. By June 2020, there was a 9.77% improvement at national level compared to the same month in 2019.

Remittances paid out by our Partner Entities at the end of July 2020 reached a total of US$574.4 million – a 4% increase compared to 2019 – thus breaking the negative gap that existed until June 2020. It is worth mentioning that SISTEMA FEDECRÉDITO has paid out a historical amount of US$​108.8 million during July this year, which highlights the importance of family remittances within the clients of the Credit Unions and Workers' Banks of SISTEMA FEDECRÉDITO.

The volume of purchases made with the SISTEMA FEDECRÉDITO credit card has decreased by 50%, and the volume of purchases made with the SISTEMA FEDECRÉDITO debit card has dropped by 20%.

These figures show that the pandemic has affected some of SISTEMA FEDECRÉDITO's products and services, especially due to the co-financing measures taken in our country. However, SISTEMA FEDECRÉDITO has remained solid as always, which proves we are the financial network with the greatest coverage in El Salvador.


How did FEDECRÉDITO adjust its operations in the context of Covid-19?

FEDECRÉDITO has been promoting teleworking during the pandemic. All personnel training took place online and will continue so together with a face-to-face format once the situation normalizes.

FEDECRÉDITO constantly monitors the liquidity of its Partner Entities and follows up on the situation throughout El Salvador's entire financial system. Likewise, FEDECRÉDITO has promoted the formalization of new international funding lines. We also monitor the quality of portfolios and the clients who have taken advantage of financial relief measures in their credit obligations. The most important measures include the transfer of loan quotas at the maturity of the loan, with a corresponding term extension as well as the transfer of credit card quotas, without any type of penalty for the client.

Contact has been maintained with all affected customers of Credit Unions and Workers' Banks in order to assess their situation and the impact caused by the pandemic. We took a special interest in MSMEs, as this sector is one of the main generators of jobs and boosts the country's economy. Based on this analysis, tailor-made solutions were suggested to each client (restructuring, refinancing, granting new resources to companies, etc.).

Our staff's and clients' health is a priority at FEDECRÉDITO, which is why we implemented various measures that have been replicated by our members. Some examples of these measures include:

  • A contingency plan for continuity of operations.

  • Basic prevention measures were communicated to all personnel. They were also displayed at the main entrances of each building, bathroom and elevator at all levels.

  • Automatic hand sanitizer dispensers were installed in all common areas.

  • A medical doctor and a nurse joined the team. They use infrared thermometers to constantly take the temperature of all customers and employees at the main entrance.

  • Rotating work shifts that favour social distancing were introduced at home and at the office.

  • Employees over the age of 60, pregnant women and people with chronic diseases are teleworking.

  • In addition, personnel in different work areas have been provided with the necessary supplies to protect themselves (hand sanitizer, disposable tissues, disinfecta​nt spray, masks and propylene gloves).

  • A flu vaccination campaign was carried out, with the support of national health personnel.

  • All buildings and vehicles are cleaned daily.

  • Transportation is provided to employees who normally commute by public transport.

  • All necessary hygiene supplies are also provided to our customers and visitors in the reception area of the banks.


Does FEDECRÉDITO's structure (consisting of 48 Credit Unions and seven Workers' Banks) allow for a better service to its customers in the context of Covid-19 and if so, how?

Undoubtedly, because SISTEMA FEDECRÉDITO is emotionally and physically close to their clients. The pandemic has promoted the use of digital channels, but the physical proximity and the importance of the network of service points, which makes us the financial network with the largest coverage in El Salvador, currently facilitates the search for individual solutions for our customers. Additionally, this has allowed us to collaborate with the government to distribute aid vouchers to those in need.


How do you see FEDECRÉDITO's role in the context of this pandemic?

FEDECRÉDITO coordinates the global response implemented by SISTEMA FEDECRÉDITO jointly with its members. Each member contacts their customers and seeks individual solutions – for example in the field of financial relief measures for loan and credit card customers.

FEDECRÉDITO, as supervisor of its members not directly supervised by the Financial System Regulatory Agency in El Salvador, has transferred to its members the Central Reserve Bank's measures in order to ensure that restructuring and refinancing solutions do not have a negative impact on the risk category of affected clients and their need to build up additional reserves.

Another aspect worth highlighting is the leading role that our association has in these troubled times. We constantly communicate and regularly meet with all the general managers of the Credit Unions and Workers' Banks to analyse the development of the crisis and its possible scenarios. For example, the whole SISTEMA FEDECRÉDITO went through a digital transformation of processes, ways of working, new products and communication with customers.

Finally, SISTEMA FEDECRÉDITO's communication strategy focuses on facilitating the use of digital channels and sharing a message of optimism and confidence with the country. 

Could you please tell us more about your initiatives related to fighting Covid-19, or helping families affected by the storms that hit the country at the same time?

SISTEMA FEDECRÉDITO is committed to helping Salvadorians through its Corporate Social Responsibility (CSR) policies. These policies promote financial inclusion and financial education and​ support education, national culture, the preservation of the environment as well as the dissemination of positive messages.

In pursuit of these policies, we have carried out several initiatives to support Salvadorians in various circumstances. Some of these examples include:

Covid-19-related actions

To protect the health of our staff, members and clients we have taken various internal measures to counter the spread of the Covid-19 virus. As part of our CSR actions, we have already delivered US$132,362,700 as Covid-19 bonuses to 441,209 beneficiaries. We also do not charge the commission of one dollar per operation for these bonuses. 

SISTEMA FEDECRÉDITO also recognized the hard work of the medical team treating Covid-19 patients at Dr. José Antonio Saldaña Hospital by donating furniture and appliances in order to help continue the fight against the pandemic.

In addition, we gave donations to the Salvadorian Red Cross and the Salvadorian Green Cross to support their work during the crisis. The funds were used to buy medical supplies to protect staff and to meet basic hygienic needs. Cleaning and food supplies were also purchased for the first responders providing voluntary service.

A series of talks were held via Facebook Live and online webinars under the “It's Time to Continue" campaign which provides people with relevant information so they can cope with the situation and receive motivational tips on how to stay active. Topics addressed include how to manage your emotions during lockdown or how to optimize your finances in times of Covid-19, successful sales and consumer loyalty in times of Covid-19, new branding trends for different markets. With such initiatives, SISTEMA FEDECRÉDITO encourages and contributes to the dissemination of positive messages.

In support of MSMEs restarting their activities, we have awarded scholarships to 10 entrepreneurs to take part in the first Bootcamp in Business & Creativity (fully online) – an entrepreneurship and innovation workshop to develop skills needed for the digitization of businesses.​

Initiatives in solidarity with families affected by storms Amanda and Cristóbal

SISTEMA FEDECRÉDITO stood in solidarity with Salvadorian families affected by the storms by donating US$50,000 to buy food packages and zinc sheets used to rebuild homes.

SISTEMA FEDECRÉDITO demonstrated that we are stronger together and partnered up with Habitat for Humanity El Salvador to build 55 concrete houses and repair 110 roofs of homes affected by the storms – a US$632,500 investment project that will directly benefit 165 families.


In your view, what additional measures should policymakers and regulators take to help the financial sector better assist their customers in the context of Covid-19?

As a result of the pandemic, there will obviously be a deterioration in the credit quality of the loan portfolio, while many micro-, small- and medium-sized enterprises will require additional financing to be able to gradually open their doors again. Financial intermediation entities have a fundamental role to play in this regard. We believe regulators should adjust the provisions and equity fund requirements to the new situation while providing an adequate time frame. Implementing public guarantee mechanisms for credits granted to micro-, small- and medium-sized companies is also very important.

Financial education; Financial inclusion; Responsible Business; Social business; Double bottom-line; Covid-19