NCUA Board to propose new complex CU leverage ratio

(July 16, 2021) A proposed rule on a new complex credit union leverage ratio (CCULR) is on the agenda for a the NCUA Board when it meets next week in open session.

Also on the agenda for the 10 a.m. meeting (to be live-streamed via the Internet) will be a request for information (RFI) on digital assets and related technologies. The board will also consider its 2022-26 strategic plan.

Based on past comments by the agency, the CCULR proposal would likely integrate an NCUA equivalent of the community bank leverage ratio (CBLR) into NCUA’s capital standards. The bank regulation (adopted by federal banking agencies in 2019) removes requirements for calculating and reporting risk-based capital ratios for most banks with less than $10 billion in assets, more than 9% in risk-based capital, and that meet certain risk-based qualifying criteria. Banks meeting the criteria can “opt-in” to use the CBLR.

In a comment letter filed in May with the agency, NASCUS said it was encouraged by the agency’s consideration of a CCULR, and supported further development.

“NASCUS has previously encouraged NCUA to consider adopting an off-ramp to the 2015 Risk-Based Capital Rule commensurate with the Community Bank Leverage Ratio (CBLR),” NASCUS wrote in its May 10 comment letter on a related issued, simplifying risk-based capital requirements.

“The flexibility of parallel, complementary risk-based capital rules will allow credit unions to choose which approach is most compatible with their business model,” NASCUS added. “Additionally, the CCULR proposal would allow both the 2015 RBC Rule and Subordinated Debt Rules to go into effect. The optional nature of the CCULR would also permit parallel development of the new rule with the simultaneous implementation of the existing 2015 RBC rules, providing credit unions with the choice to opt in and out of the CCULR in the future.”

NASCUS also noted, in its comment, that parallels between a CCULR proposal and the existing bank CBLR is another advantage. “The regulatory and commercial experience with the CBLR can help inform the development and implementation of NCUA’s CCULR proposal,” NASCUS wrote.


NCUA Board agenda, July 22 meeting