NCUA Delays Implementation of Risk-based Capital Rule to 2020

Decision gives credit unions an additional year to raise capital and achieve compliance.

8/7/18

NCUA Headquarters

NCUA headquarters in Alexandria, Va.

As expected, during its Aug. 2 meeting, National Credit Union Administration (NCUA) approved a plan to delay the implementation of the risk-based capital rule until Jan. 1, 2020.

As a result, 90 percent of federally insured credit unions would be exempt from the NUCA’s risk-based capital rule, and covered credit unions would have an additional year to prepare under a proposed supplemental rule approved by the NCUA Board.

“This proposed rule is a substantive solution, not just another delay,” Board Member Rick Metsger said. “It will give the agency time to finalize its systems and give the handful of complex credit unions who do not have adequate risk-based capital time to raise capital or adjust their balance sheets to achieve compliance and protect their members.”

In addition, the NCUA created a more robust definition of complex credit unions by raising the asset threshold from $100 million to $500 million. The NCUA will no longer consider internet banking or investments with maturities of greater than 5 years where investments exceed 1 percent of assets as indicators of complexity.

“The proposed changes will still govern 76 percent of all credit union assets,” said John Trull, AVP, Regulatory Advocacy for the Northwest Credit Union Association. “The delayed implementation and changes proposed to the risk-based capital rule are meaningful. We applaud the NCUA Board.”

He went on to add, “The rule itself will not, as of today, negatively impact a single Northwest credit union. In fact, the potential to accept supplemental capital for risk-based purposes is a benefit that makes the rule more palatable to covered credit unions.”