OLYMPIA, Wash. – The Department of Financial Institutions cleared state chartered credit unions to receive and hold stock in Visa Inc., as long as they receive DFI approval.
Each state chartered credit union wanting to participate in the cards giant’s initial public offering must submit a written application to the DFI’s Division of CUs and the application will be approved, denied or conditioned by the state regulator, the DFI said in a new legal opinion.
Hundreds of credit unions are in the process of receiving common shares in the Visa IPO. Only those credit unions that are direct members of Visa will receive shares.
The IPO is part of a restructuring that will combine the U.S., Canadian and European operations of Visa, the world’s largest payment system. Based on a the 2005 IPO for MasterCard–the share price quadrupled in 18 months–the Visa offering, expected early next year, is expected to be one of the hottest of the year.
The Washington regulator said credit unions may retain the shares or sell them when they are sellable, a period of three years. But the credit union may not buy or sell additional shares. The regulator said if it determines that holding Visa stock no longer is a “safe and prudent investment” it could order a credit union to divest the shares.
State chartered credit unions in Washington are otherwise prohibited from buying or holding common stock.
Earlier, NCUA, which bars federal charters from holding common stock, also approved the Visa distribution.
