Quiero saber acerca de...

lotter on DSK11XQN23PROD with PROPOSALS2

Federal Register / Vol. 86, No. 155 / Monday, August 16, 2021 / Proposed Rules The calendar quarter that the qualifying complex credit union will begin calculating its risk-based capital ratio. The earliest a complex credit union may begin calculating its riskbased capital ratio is the calendar quarter that the credit union submits its notification.
A completed Call Report schedule as if the complex credit union had calculated its risk-based capital ratio the prior quarter. For example, if a credit union seeks to begin using a risk-based capital ratio in the second quarter, it would have to provide notice to the appropriate Regional Director or the Director of the ONES by June 1st and would have to include a Call Report with data as of March 31st.
Under the other banking agencies CBLR framework, qualifying complex credit unions that have opted into the CBLR may opt out of the framework at any time. In addition, commenters to the ANPR generally favored allowing credit unions to liberally opt into and out of the CCULR framework. The Board believes, however, that qualifying complex credit unions should not opt out of the CCULR framework at any time because, in contrast to qualifying community banking organizations, qualifying complex credit unions are not currently calculating risk-based capital under the 2015 Final Rule.
The Board notes that qualifying community banking organizations had been complying with their revised riskbased capital requirements for several years when the CBLR was implemented.78 Banking organizations had systems and processes in place to implement risk-based capital, staff had acquired experience calculating their capital ratios under risk-based capital, and qualifying complex banking organizations had been examined for compliance with risk-based capital standards. In contrast, complex credit unions will be subject to the risk-based capital ratio requirement established in the 2015 Final Rule for the first time when they are eligible to opt into the CCULR framework. It is likely that a qualifying complex credit union opting out of the CCULR framework would not have any experience calculating a riskbased capital ratio under the 2015 Final Rule.
The Board does not believe it is prudent to allow qualifying complex credit unions opting out of the CCULR
framework the same flexibility as provided to qualifying community banking organizations under the CBLR.
Instead, the Board believes a qualifying complex credit union opting out of the 78 Supra
note 3.

VerDate Sep<11>2014

18:24 Aug 13, 2021

Jkt 253001

CCULR framework should notify the NCUA of its intentions to begin calculating a risk-based capital ratio.
Following notification to the NCUA, the NCUA may, through the supervisory process, monitor whether the credit union has acquired the necessary systems and processes to be capable of calculating and reporting its risk-based capital ratio accurately.
Question 13: The Board invites comment on the proposed procedure a complex credit union would use to opt out of the CCULR framework. What are commenters views on the frequency with which qualifying complex credit unions may opt out of the CCULR
framework? Do qualifying complex credit unions anticipate frequent switching between the CCULR
framework and the risk-based capital requirements, and if so, why? What are the operational or other challenges associated with switching between frameworks?
G. Compliance With the Proposed Criteria To Be a Qualifying Complex Credit Union Under the proposal, after a qualifying complex credit union has adopted the CCULR framework and then no longer meets the proposed qualifying criteria, it would be required, within a limited grace period of two calendar quarters, either to once again meet the qualifying criteria or comply with the risk-based capital ratio requirements. The grace period would begin at the end of the calendar quarter in which the credit union ceases to satisfy the criteria to be a qualifying complex credit union and would end after two consecutive calendar quarters. For example, if the complex credit union exceeded one of the qualifying criteria after December 31st and still does not meet the criteria as of the end of that quarter, the grace period for such a credit union would begin at the quarter ending March 31st and would end at the quarter ending September 30th. The complex credit union could continue to use the CCULR
framework as of June 30th, but would need to fully comply with the risk-based capital ratio including the associated reporting requirements as of September 30th, unless at that time the qualifying complex credit once again met the qualifying criteria of the CCULR
framework. The Board believes that this limited grace period is appropriate to mitigate potential volatility in capital and associated regulatory reporting requirements based on temporary changes in a credit unions risk profile from quarter to quarter, while capturing more permanent changes in risk profile.

PO 00000

Frm 00015

Fmt 4701

Sfmt 4702

45837

During the grace period, the credit union continues to be treated as a qualifying complex credit union and must continue calculating and reporting its CCULR, unless it has opted out of using the CCULR framework.
Additionally, during the grace period, the qualifying complex credit union continues to be considered to have met the capital ratio requirements for the well-capitalized capital category.
However, if the qualifying complex credit union has a CCULR of less than seven percent, it would not be considered well capitalized. Instead, its capital classification would be determined by its net worth ratio. For additional discussion on the treatment of a qualifying complex credit union when its CCULR falls below 10 percent, see Section HTreatment of a Qualifying Complex Credit Union That Falls Below the CCULR Requirement.
The two-quarter grace period is similar to the other banking agencies CBLR framework. However, unlike the CBLR framework, under the proposed rule, a qualifying complex credit union that is likely to not meet the requirements to be a qualifying complex credit union by the end of the grace period must submit written notification to the appropriate Regional Director or the Director of the ONES. The notification must be submitted at least 30 days before the end of the grace period and state that the credit union may cease to meet the requirements to be a qualifying complex credit union.
The Board believes it is necessary to receive notice in case the complex credit union begins calculating a riskbased capital ratio. As discussed previously, qualifying complex credit unions initially opting into the CCULR
would not likely have calculated a riskbased capital ratio under the 2015 Final Rule. Therefore, the notice would provide the NCUA the option, through the supervisory process, to monitor whether the appropriate systems and processes are being developed to calculate a risk-based capital ratio.
The Board acknowledges that a credit union may believe it is reasonably likely to meet the qualifying criteria, and not submit a notice, and then be subject to risk-based capital requirements at the end of the quarter for failure to comply with qualifying criteria. The Board is providing credit unions flexibility with notice requirements as a form of burden reduction. It would be unnecessary for every credit union to file notice during the grace period, as some credit unions will be certain of their compliance with the qualifying criteria. For such credit unions, completing the required notification would be an unnecessary
E:FRFM16AUP2.SGM

16AUP2