Whats actually frightening is that the Regulator requires Credit Unions to have a 10% Regulatory Reserve of Total Assets from retained profits er..no mention of any other capital. Given that the default position on Basel III is er 3% of Total Assets stripping out any risk weightings .. its raises the question as to what the logic is for such a percentage. Any views?
Is the 10% regulatory reserve too high?
- Thread starter WizardDr
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@Slim
The 10% ratio for CU as enunciated by the Registar is based on ALL assets and is Retained Profits only and takes NO account of risk weightings (eg in Basel the non-weighted percentage is 3%).
Would you look at the WCCU 10% ratio and tell me what is used to make it up.
The 10% ratio for CU as enunciated by the Registar is based on ALL assets and is Retained Profits only and takes NO account of risk weightings (eg in Basel the non-weighted percentage is 3%).
Would you look at the WCCU 10% ratio and tell me what is used to make it up.
However - lets look at the 10% reserve. Whats your view on what is included as counting for the Reserve.
The Irish CU 10% reserve is made up exclusively of retained profits, which is but one element of several that could have been included.
The Irish CU is on ALL assets - so if a CU have €10m in government securities, german bunds, bank account they MUST have a Reserve of 10% against this.
This is the obscenity. The Basel III rules when you strip away the risk weightings the reserve ratio is THREE %.
Note - if Bank of Ireland had kept the reserve ratio to 4% FOUR PERCENT of total assets they would not have needed a bailout repeat they would not have needed a bailout.
We need the debate on the absurdity of what the Regulator is doing.
The Irish CU 10% reserve is made up exclusively of retained profits, which is but one element of several that could have been included.
The Irish CU is on ALL assets - so if a CU have €10m in government securities, german bunds, bank account they MUST have a Reserve of 10% against this.
This is the obscenity. The Basel III rules when you strip away the risk weightings the reserve ratio is THREE %.
Note - if Bank of Ireland had kept the reserve ratio to 4% FOUR PERCENT of total assets they would not have needed a bailout repeat they would not have needed a bailout.
We need the debate on the absurdity of what the Regulator is doing.
Brendan Burgess
Founder
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These important posts got lost in a longer thread which covered lots of issues. I think that the issue needs to be debated.
Could someone familiar with the issue, give an example of what it all means?
Could someone familiar with the issue, give an example of what it all means?