CUS & COVID – 19 – RESPONSES OF REGIONAL REGULATORS
Presented By – Denis Felix Executive Director (Ag) CCCU / CCLCS Webinar
OUTLINE OF PRESENTATION
- Status of Credit Union Sector
- Objectives of Supervision
- Adjustments made to Supervision due to COVID – 19
- Areas of Current Supervisory Focus
- Follow up & Next Steps
STATUS OF THE CREDIT UNION AS AT MARCH 31, 2020
- Credit Unions – Thriving sector comprising 10 & A League with total assets EC$1.04B
- Membership > 70K
- A Stable sector
- Generally, good compliance with accepted Prudential Standards
- Risk Based Supervisory Framework in place
- Contribute to financial stability
- Ensure safety & soundness of the sector
- Ensure public confidence is maintained
- Ensure protection of members investments & safeguard of certain statutory & democratic privileges
- Protection of the gains realized in recent years
ADJUSTMENTS TO SUPERVISION re COVID-19:
- Suspended on-site inspections
- Initial commitment of forbearance for certainstatutory & prudential requirements –
- – Completion of audited financial statements for 2019
- – Completion of annual general meetings
- – Compliance with prudential ratios
AREAS OF CURRENT SUPERVISORY FOCUS:
- Enhanced off-site monitoring and supervision
- – Emphasis on accurate and timely submission of financial reports from credit unions
- HIGHLIGHTS OF SPECIFIC AREA OF FOCUS – CONTINGENCY MEASURES
- AGM’s – convening of AGM’s to be guided by protocols in place from the competent Authorities on how to treat with mass gatherings.
- There is an expectation for speedy holding of AGM’s on return to normalcy or as protocol allows – re moral suasion or statutory provision
- Completion of 2019 audited financial statements
- – Auditors are now allowed to carry on normal service so credit unions have been urged to make suitable arrangements to complete audits.
- Funding of Liquidity shortfalls – larger CUS urged to conduct cash flows at least quarterly and set up lines of credit with bankers while smaller credit unions urged to use the League’s CFF*
- Exploring engagement of ECCB for possible liquidity funding of SIFI’s via CCCU, GARFIN & Min. of Finance / Monetary Council
- Compliance with Financial Indicators – The minimum standards will remain in place. However, GARFIN is prepared to exercise forbearance – but insolvency must be avoided at all cost.
- Use of accounting standards such as IFRS forNPL’s provisioning remain in effect
- Key Reporting Requirements
- – Monthly reporting of balance sheets and income statements to be submitted as currently required
- – Quarterly reports to be submitted as currently required with emphasis on delinquency information
- – New weekly reporting of liquidity – 5 largest credit unions reporting weekly on new covid reporting form*.
FOLLOW UP & NEXT STEPS:
- For the quarter ending June 30, 2020 the sector is expected to cope quite well particularly with liquidity
- Ongoing monitoring will continue for 2020 so as to identify likely liquidity shortfalls for timely responses
- Recognising the moratorium arrangement effected by credit unions and its likely impact on other areas of operations, consideration is being given for a suitable reporting form.
The need has been identified for a reliable source of future liquidity funding to cope with similar occurrences. This will be considered in the new Cooperative Societies Regs. being finalized. One area for such consideration could be the placement of credit unions’ reserves*.