Proposal Would Let CUs Cross Borders
The NCUA board last week issued for public comment a proposed rule that will allow federally insured credit unions to branch internationally for the first time. Currently only defense credit unions are allowed to set up overseas branches.
The proposal, issued for a 90-day comment period, leaves open critical issues to be decided, such as deposit insurance for internatinal branches, and field of membership. The proposal suggests that deposits in international branches would be insured by the NCUSIF, unless insured by the government in the host country. But other insurance schemes are also being explored, including insuring only those deposits that are denominated in U.S. dollars.
The proposal would also allow credit unions to serve foreign nationals within their exisitng FOMs, such as those working for U.S.-based select employee groups. The proposal leaves open the possibility that credit unions could add SEGs in the host country.
The measure would also require the credit union to obtain approval by the host country and to submit a comprehensive business plan for NCUA's approval, including plans for foreign currency risk, security, marketing and other related issues.
Separately, the board issued for comment proposed amendments to its rule governing employee retirement benefits. The proposal would formalize standards NCUA has previously touched on in opinion letters, including the authority of federal credit unions to purchase securities that are impermissible investments for the credit union itself, as long as they are earmarked for a retirement benefit.