In general, the NCUA Board adopted most of the corporate capital and retained earnings requirements originally proposed in January 2009. According to final Part 704 regulations posted on the NCUA's website, corporates must now comply with three new capital ratios that include measurements of tier-one capital, retained earnings and risk.
None of the new capital requirements would apply during the first year. During this period, the current total capital ratio of 4% would remain in effect.
However, two new risk-based capital ratios will come into effect one year from today. Corporates will be required to meet a minimum 4% Tier 1 risk-based capital ratio and a minimum 8% total RBC ratio. In addition, corporates must meet an interim leverage ratio, which is almost identical to the existing total capital ratio requirement of 4%.
Two years from now, after NCUA removes legacy assets from corporate balance sheets, most corporates will have very low-risk weighted assets, and neither of the two RBC ratios will likely dictate the amount of capital corporates need at this point, the rule stated. Instead, minimum capital will likely be dictated by the interim leverage ratio, meaning a corporate will need 200 basis points in Perpetual Contributed Capital and another 200 basis points in Non-Perpetual Capital Accounts.