A proposal to create the credit union version of the community bank leverage ratio (CBLR) is out for public comment until Oct. 15, according to a notice in the Federal Register Monday.
Issued for comment during the July 22 National Credit Union Administration (NCUA) Board meeting, the proposed rule would make a simplified measure of capital adequacy available to federally insured credit unions defined as “complex” – meaning those with more than $500 million in assets.
The NCUA said its proposed new complex credit union leverage ratio (CCULR) framework is comparable to the community bank leverage ratio (CBLR) that went into effect in January 2020 for banks under the 2018 financial regulatory relief law. Qualifying credit unions that opt into the CCULR would not be required to calculate a risk-based capital ratio under the agency’s 2015 risk-based capital rule, which goes into effect Jan. 1.
Under the NCUA proposed rule, a complex credit union that opts into the CCULR framework and maintains the minimum net worth ratio – for the CCULR, that would begin with 9% as of Jan. 1, 2022, and rise gradually to 10% by Jan. 1, 2024 – would be considered well capitalized. Other qualifying criteria would include off-balance-sheet exposures being equal 25% or less of total assets; trading assets and trading liabilities being 5% or less of total assets; and goodwill and other intangible assets being 2% or less of total assets.