The NCUA’s proposed risk-based capital rule would require credit unions with more than $50 million in assets to hold $6.3 billion to reach the same capital cushion they have in the current system, according to NAFCU’s Director of Research Dr. David Carrier.
NAFCU said the capital cushion represents “the difference between a credit union’s net worth ratio and the minimum required to be adequately capitalized.”
Carrier’s analysis found that credit unions with assets from $50 million to $100 million would need to retain a total of $192 million more in capital accounts, while credit unions with assets from $100 million to $250 million would have to hold $346 million in additional reserves.
The total for credit unions with assets from $250 million to $500 million would be $1.05 billion more capital, and $1.28 billion for credit unions from $500 million to $1 billion.
Credit unions with more than $1 billion in assets would need to hold $3.47 billion more capital, according to Carrier’s analysis.
“This rule as proposed will have unpredictable consequences for loan and share growth, as individual credit unions will need to adjust their balance sheets to meet the new requirements,” said Carrier in a statement on Tuesday. “Because credit unions cannot just raise capital from the open market, this cost will undoubtedly be passed on to credit union members.”