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Corporates present biz plans to NCUA
WASHINGTON (4/1/11)--Thursday was the deadline for corporate credit unions and the bridge corporates to file their new business plans with the National Credit Union Administration (NCUA), bringing them another step closer to restructuring the corporate system. Plans were due by the end of the day. "NCUA anticipates receiving the required capital plans from each of the corporate credit unions by the close of business today and has begun the review process," said Todd Harper, NCUA director of public and congressional affairs, Thursday afternoon. Bridge corporates were to submit to NCUA their member-approved transition plans to preserve services. Plans were to include transferring members or the bridge operations into a new corporate charter, an existing corporate charter, or another entity, according to NCUA's transition timeline document. Other undercapitalized corporate credit unions were required to submit strategic and capital compliance plans. Corporates with legacy assets remaining on their balance sheets were to include a stress test that identifies a range of potential credit or other losses from legacy assets, the impact on potential losses to capital, and a transparency framework to cultivate credibility and trust with member credit unions. NCUA had "not yet received any plan" related to a possible bid by a group of corporates to acquire U.S. Central Bridge Corporate's products and services, Harper told News Now. The agency has until April 29 to finalize its review of the plans submitted Thursday for any changes and request revision where appropriate. Other significant milestones in 2011 for corporate action include:
* May 31: Corporates present their strategic business and capital compliance plans to their members, with transparency of potential, future other-than-temporary impairment (OTTI) charges related to legacy assets. Their "capital subscription" process will begin, with corporates announcing a targeted goal for capital subscriptions. Those unable to reach their goal will be required to return funds to credit unions who participated in the subscription. They will be required to use escrow accounts to accumulate subscriptions to provide protection to credit unions if sufficient capital doesn't materialize. * May 31: Bridge corporates' leadership teams will initiate their transition plan. Those with a new or existing charter will begin the application and capital subscription process, if needed. They can use escrow accounts through the capital raise period to protect member credit unions. Within a targeted 24 months, NCUA will wind down bridge operations if members have not implemented a collective solution. * Aug. 31: Corporates must have an interim benchmark for evaluating their progress and submit a progress report to NCUA. * Oct. 20: The first capital deadline. The corporates' initial Part 704 capital requirements take effect. For those planning to raise capital to meet required minimums but falling short, all newly subscribed capital can be subject to release. These corporates will be subject to prompt corrective action, which may include filing net worth restoration plans and being subject to the discretionary and mandatory actions of the new rule. * Oct. 20: First capital deadline. Bridge corporates must meet initial capital requirements of Part 704, assuming the bridge transitions to a new charter or another corporate. If the bridge fails to meet the capital required, all subscribed capital will be released and the bridge wound down over time.
Other dates in the transition timeline include Oct. 20, 2012, which is the targeted end of bridge corporate transition period, and Oct. 20, 2013, when the full phase-in of rules on new capital requirements. By that date, Tier 1 capital (retained earnings and perpetual capital only) must equal 4%. For more detail, use the resource link.
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