NCUA slates action on subordinated debt rule changes

Just one item is slated for consideration during the March 16 open meeting of the National Credit Union Administration (NCUA) Board: a final rule on subordinated debt.

Issued last September, the proposed rule would extend the regulatory capital treatment of grandfathered secondary capital (GSC), which would benefit low-income credit unions, including minority depository institutions (MDIs) and community development financial institutions (CDFIs) participating in the Treasury Emergency Capital Investment Program (ECIP). The ECIP was created to help communities disproportionately affected by the coronavirus pandemic.

The proposed rule would make a handful of amendments to the subordinated rule that took effect in January 2022, among them:

  • Replace the 20-year maximum maturity of subordinated debt notes with a requirement that any credit union seeking to issue notes with maturities longer than 20 years demonstrate how the instruments would continue to be considered “debt.” (The January 2022 final rule sets a maximum maturity of 20 years for subordinated debt notes, but grant funds from Treasury’s ECIP can be held up to 30 years.)
  • Extend the regulatory capital treatment of grandfathered secondary capital (GSC) to the later of 30 years from the date of issuance or Jan. 1, 2052.

The March 16 open NCUA Board meeting is slated for 10 a.m. Eastern and can be viewed in person at the agency’s Alexandria, Va., headquarters; or online via the agency’s YouTube channel.

NCUA Board March 16 open meeting agenda

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