Tuesday, September 17, 2019

NCUA Issues Guidance on Secondary Capital Plans

The National Credit Union Administration (NCUA) issued guidance to staff on credit unions offering secondary capital.

NCUA wrote that many low-income credit unions (LICUs) have a record of prudently using secondary capital; however, some planned uses of secondary capital can be complex and involve higher risk.

NCUA re-iterated in its letter to staff that there is no "one size fits all" secondary capital plan for LICUs.

The supervisory letter should help LICUs to better understand the secondary capital plan submission process.

The letter also explains the safety and soundness expectations of the agency regarding secondary capital plans.

Appendix A includes examiner review questions. A LICU should be prepared to discuss these questions with their examiner and address these questions in its written plan.

This letter makes it clear that if a LICU plans to offer secondary capital, the LICU will need to follow NCUA's lead.

Read the letter.

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