Credit Union Leaders Discuss Regulatory Relief with the Basel Committee
January 19, 2017
BASEL, Switzerland—Credit union leaders from around the world met Thursday with Basel Committee on Banking Supervision Secretary General William Coen and other senior members of the Basel Committee Secretariat to discuss how best to reduce regulatory burdens on credit unions.
The international credit union movement was represented by Martha Durdin, president & chief executive officer of the Canadian Credit Union Association, Ed Farrell, chief executive officer of the Irish League of Credit Unions, Pat Fay, director of the Irish League of Credit Unions, Bill Hampel, chief economist and chief policy officer of the Credit Union National Association of the USA, Daniel Frederic Van Det, executive director of credit for Banco Cooperativo Sicredi of Brazil, and Michael Edwards, vice president & general counsel of the World Council of Credit Unions.
During the meeting, the credit union leaders urged the Basel Committee to reduce regulatory burdens on credit unions. The credit union leaders urged the Committee to carve out non-internationally active institutions like credit unions from Basel Committee standards and to establish a working group focused on considering the potential impact of proposed Basel Committee standards on community-based financial institutions. Credit unions also supported the Committee’s proposal to clarify its rules on correspondent banking to help make it easier for credit unions to establish and maintain correspondent banking relationships.
In addition, the credit union leaders supported the Basel Committee’s proposal to allow a capital “add-back” to reduce the impact of on credit union capital from the implementation of expected credit loss accounting standards including International Financial Reporting Standard 9 (IFRS 9) and the Current Expected Credit Loss (CECL) standard under US generally accepted accounting principles. Also discussed were longer term measures to address the de facto capital increase that will occur under IFRS 9 and CECL, such as possibly including general provisions related to expected credit losses in Basel III Additional Tier 1 capital, the second most desirable form of regulatory capital under Basel III. World Council also recently submitted written comments to the Committee regarding its proposed “transitional” measures involved with implementation of IFRS 9 and CECL as well the Committee’s discussion paper on how to address IFRS 9 and CECL in the long term.
“We believe that carving out locally focused financial institutions from Basel Committee standards is one of the best ways to limit regulatory burdens on credit unions and other community-based financial cooperatives,” said Michael Edwards, World Council’s vice president and general counsel. “Credit union regulators frequently look to Basel Committee standards even if they are not required to implement Basel Committee rules on locally focused institutions per se."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented 300+ technical assistance programs in 89 countries. Worldwide, 68,882 credit unions in 109 countries serve 235 million people. Learn more about World Council's impact around the world at www.woccu.org.