CUNA Regulatory Comment Call

September 26, 2002

Overseas Branching by Federally Insured
Credit Unions


  1. The credit union must obtain written approval from the host country to establish a branch in that country. The document must explicitly recognize NCUA’s authority to examine and take any enforcement action concerning that branch office, including conservatorship and liquidation actions. State-chartered credit unions must further obtain written approval from the state supervisory agency and submit the approval with the application to NCUA.
  2. The credit union must develop a detailed business plan that addresses:

    • Market analysis of the area where the foreign branch will be located;
    • Plan to address foreign currency risk;
    • Operating facilities, including office space, equipment and supplies;
    • Safeguarding of assets, insurance coverage, and records preservation;
    • Written policies regarding the branch (shares, lending, capital, charge-offs, collections);
    • Field of membership to be served by the foreign branch, the financial needs of the members to be served and the products to be offered;
    • Detailed pro forma financial statements for branch operations for the first and second year;
    • Internal controls, including cash disbursal procedures;
    • Accounting procedures to be utilized; and
    • Foreign income taxation.
  3. The credit union must submit documentation exhibiting host country approval, state regulator approval if applicable, and the business plan to NCUA and receive NCUA approval before establishing the branch office.


  1. Do you disagree with any of the elements required to be in the comprehensive business plan?

    Yes ______ No ______

    If yes, please indicate which elements you believe should be eliminated or added and the reasons.

  2. Do you feel that NCUA’s approval/revocation procedures are appropriate?

    Yes ______ No ______

    If not, how should the procedure(s) be changed and why.

  3. With regard to the issue of insurance, NCUA is considering an approach whereby a credit union’s business plan would be required to address the insured status of members accounts and, in any event, accounts would be NCUSIF insured only if denominated in U.S. dollars and only payable, by the term of the account agreement, at a U.S. office of the credit union. If the host country requires insurance from its own system, such accounts would not be insured by the NCUSIF. Do you have any comments on this proposal or any other alternative for addressing NCUSIF coverage related to foreign branching and accounts opened and maintained at a foreign branch?

  4. Do you believe this proposal would unduly encroach upon the authority of state regulators to oversee the operations of the state-chartered credit unions they oversee?

    Yes ______ No ______

    If yes, in what respect(s) do you believe this proposal would encroach upon state regulatory authority?

  5. Do you agree that NCUA should remove the limitation on the location of foreign branches for FCUs imposed by NCUA’s Chartering and Field of Membership Manual and require them to follow the requirements of this proposed rule?

    Yes ______ No ______

    If not, why not?

  6. Other comments?

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •