Basel Committee reduces disclosure burdens for credit unions

The World Council of Credit Unions welcomed the exemptions, which it had been urging for throughout the year

Credit unions and community-based depository institutions will be exempt from many aspects of the Basel Committee’s new disclosure rules issued on 11 December.

The World Council of Credit Unions (Woccu), which has spent the year campaigning for the exemptions, welcomed the news.

The rules are part of the Basel III international risk-based capital and liquidity standard. The committee has made other disclosure requirements optional at national level.

Woccu said many other disclosure requirements would be limited to institutions that use internal models to calculate capital levels or are parties to derivatives transactions, which exempts most community-based depository institutions from these paperwork burdens.

National-level regulators will be able to decide whether to require depository institutions to issue disclosures on capital distribution constraints and on exposures to problem assets under expected credit loss accounting standards like International Financial Reporting Standard 9 (IFRS 9) and US generally accepted accounting principles’ Current Expected Credit Losses (CECL).

“We commend the Basel Committee for establishing proportional reporting thresholds and increasing national discretion over disclosures requirements, which should help reduce the regulatory burden spill over that rules for internationally active banks often have on community-based institutions like credit unions and other mutual deposit-taking institutions,” said Michael Edwards, Woccu’s senior vice president and general counsel.