Effective Date Set for NCUA’s Final Rule on Credit Union Complex Leverage Ratio Finance & Banking


United States: Effective Date Set for NCUA’s Final Rule on Credit Union Complex Leverage Ratio

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The National Credit Union Administration (“NCUA”) has set January 1, 2022 as the effective date for a final rule that would establish a simplified method of measuring capital adequacy for credit unions classified as complex ( those with total assets over $500 million). The final rule was published in the Federal Register.

As previously noted, the rule updates the NCUA’s October 2015 Risk-Based Capital Final Rule, “including addressing securitizations of assets issued by credit unions, clarifying the treatment of exposures off-balance sheet, deducting certain mortgage-serving assets from complex credit union risk – capital-based numerator, updating several definitions related to derivatives, and clarifying the definition of a consumer loan.”

The NCUA also finalized an amendment to the subordinated debt rule that expands the scope of the rule to include assets issued to the US government and any of its subdivisions.

In choosing the date of entry into force, the Council “recognizes[d]that January 1, 2022 is less than the standard effective date of 30 days following the publication of this final rule. He cited several factors as to why credit unions will not be disadvantaged as of January 1, 2022, including, among others: (i) that credit unions are not required to comply with the ratio framework Complex Financial Leverage (“CCULR”) “as it is an optional framework to the 2015 Final Rule”; (ii) credit unions are not required to choose theirs until the end of the first quarter of 2022, and (iii) the final rule “does not include any new calculations for complex credit unions and relies on the net worth ratio, an existing capital measure that credit unions report quarterly.”

Primary sources

  1. NCUA: Capital Adequacy – The Complex Leverage Ratio of Credit Unions; Risk based capital

  2. NCUA: Subordinated debt

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