NCUA says supervisory change streamlines LICUs secondary capital processes

April 6, 2015
ALEXANDRIA, Va. (4/7/15)--Revisions to the National Credit Union Administration's supervisory processes announced Monday are meant to make it easier for low-income credit unions (LICU) to obtain secondary capital "while giving investors clarity and confidence."

The agency's National Supervision Policy Manual was revised by adding a description of the streamlined secondary capital approval process on page 130 and, on page 128, a series of six bullets identifying the "minimum requirements" to redeem secondary capital, the agency told News Now.

Secondary capital helps low-income credit unions supplement their net worth, allowing them to expand services and maintain capital levels. NCUA Chair Debbie Matz said the changes to the manual were aimed at achieving two goals: expediting the approval by regional offices of secondary capital requests and making it possible for credit unions that have secondary capital to return portions of the loans that no longer count towards net worth.
Matz announced the formation of a working group on secondary and supplemental capital (as well as one on field of membership issues) in December. According to the NCUA, the group will, among other things, consider ideas for raising the value of secondary capital for low-income credit unions.
The NCUA said representatives from credit unions and secondary capital investors are being consulted as the working group identifies investment models that are likely to be successful in the marketplace.
The current revisions did not come from the working group, which has only been working a few months; rather they were driven by staff from the NCUA's Offices of Examination and Insurance and Small Credit Union Initiatives.
The working group is scheduled to publish a secondary capital website later this month.