ALEXANDRIA, Va. -
In a legal opinion sent to the cards company, NCUA said because of the unusual circumstances in which member institutions of Visa are receiving stock as part of the IPO, the credit unions will be allowed to hold the lucrative stock, expected to bring a windfall of as much a $1 billion worth of stock to more than 2,000 credit unions that are direct members of the card association. Like the 2005 IPO for MasterCard, shares in Visa are expected to be prized investments.
MasterCard shares issued to hundreds of credit unions have more than quadrupled in value, to over $190, since their introduction at $39 in May 2005, earning millions of dollars in windfall profits for the credit union-holders.
"FCUs are not actually making an investment in Visa stock," said NCUA, "namely, they are paying no tangible consideration and are receiving it as a result of the business decisions of Visa, a third party. Further, one primary aspect of the business of credit unions is to lend to their members, and an FCU's eligibility for Visa stock is directly connected to the FCU's previous volume of lending as a part of the Visa program."
State-chartered credit unions, said NCUA, will want to consult with their state regulators to determine the permissibility of holding the Visa shares.
