NCUA Board Unanimously Approves Proposed Rule Clarifying Requirements for Credit Unions Seeking to Assume Liabilities, Merge or Consolidate with Other Financial Institutions

While historically a relatively small number of banks have been acquired by credit unions, there has been a modest uptick recently, prompting the Board to establish “clear rules of the road.”

NCU Board Jan 2020
The proposed rule provides more information about what the NCUA needs in order to fulfill its statutory mandate to approve or deny proposed transactions. It also lists the circumstances under which the deposits qualify for shared insurance through the National Credit Union Share Insurance and explains the process for making customers of other types of financial institutions members of federal credit unions. The Board reiterated that all such transactions require NCUA approval and, in the case of a federally insured, state-chartered credit unions, state regulator approval. Public comment on the rule must be received within 60 days of publication in the Federal Register.

The Board also unanimously approved a proposed rule expanding credit unions’ ability to issue subordinated debt.The proposed rule would permit low-income credit unions, complex credit unions, and new credit unions to issue subordinated debt, under certain requirements, for purposes of regulatory capital treatment. Public comment on the rule must be received within 120 days of publication in the Federal Register.