NCUA issues capital planning and stress testing rule

This story appeared in Bank Digest.

The National Credit Union Administration is issuing a rule requiring federally insured credit unions (FICUs) with assets of $10 billion or more to develop and maintain capital plans. The rule also provides for annual stress tests of those credit unions. The NCUA believes that in order to ensure the safety and soundness of the credit union system and to protect the National Credit Union Share Insurance Fund, the largest FICUs should have in place systems and processes to monitor and maintain their capital adequacy.

The rule requires FICUs with assets of at least $10 billion to submit capital plans annually to the NCUA. The rule establishes a supervisory tool for assessing covered credit union capital adequacy by also providing for annual stress tests of their balance sheets using baseline, adverse, and severely adverse scenarios