The number of credit unions could shrink by more than one third in just five years due to the NCUA's proposed risk-based capital rules, according to former NCUA Chairman Dennis Dollar (pictured at left).

Dollar, who is now principal partner at Dollar Associates LLC in Birmingham, Ala., told CU Times the industry will further consolidate as more credit unions look for economies of scale in order to cope with the rules, nicknamed “RBC2.” The related risk management scrutiny and issues around access to additional capital will also fuel consolidation, he said.

“We are working 18 mergers right now in our firm, and regulatory considerations are driving over half of them,” he said. “As RBC gets closer to becoming effective in 2018 and 2019, this will accelerate the compliance frustrations of many credit union boards and management teams. This will bring about more, not fewer, mergers as 2020 nears. I predict we will have approximately 4,000 credit unions by 2020 when RBC is fully implemented and examinations are being conducted annually with RBC numbers as driving factors in the exams.”