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Status: You are viewing the version of the handbook as on 2009-03-31.

CRED 8.4 Version 2 credit unions

CRED 8.4.1R
  1. (1)

    A version 2 credit union must maintain at all times a risk-adjusted capital to total assets ratio of at least 8% unless CRED 8.4.3 R applies.

  2. (2)

    Risk-adjusted capital is calculated as follows:Capital + (provisions - balance of the net liability of borrowers where their loans are 12 months or more in arrears - 35% of the net liability of borrowers where their loans are 3-12 months in arrears).

CRED 8.4.2R

In calculating risk-adjusted capital:

  1. (1)

    the maximum net figure for provisions (after deduction of the stipulated amounts for loans in arrears) that can be included is 1% of total assets;

  2. (2)

    'provisions' includes specific provisions and general provisions; and

  3. (3)

    mortgage loans and provisions in respect of mortgage loans must not be included in calculating the loan balances to be deducted from, and the provisions to be added to, the amount of capital.

Minimum initial capital

CRED 8.4.3R

A version 2 credit union must have initial capital of at least £5,000.

CRED 8.4.4G

For the meaning of 'initial capital' see CRED 8.2.1 R (5).

CRED 8.4.5G

For the relationship between registration and authorisation see CRED 13.2.1 G. The purpose of CRED 8.4.3 R is to establish for these credit unions a minimum amount of capital at authorisation, out of which early expenses may be defrayed. It should be noted that the requirement in CRED 8.4.3 R does not affect a credit union's obligations to meet the other capital requirements that apply to it. The ability of a credit union to comply on a continuing basis with the other capital requirements that apply to it will be a central factor for consideration in any application for authorisation.