Central 1 Credit Union, Vancouver, British Columbia, said it will return capital to its members – $50 million Canadian dollars’ worth – following a regulatory change.
On Aug. 24, Central 1’s regulator, the British Columbia Financial Institutions Commission, amended the credit union’s borrowing multiple requirement to no more than 17.0:1 for the Mandatory Liquidity Pool segment, and no more than 15.0:1 for the Wholesale Financial Services segment. As a result, Central 1 said it was able to reduce the amount of capital it holds, and return that capital to members, while remaining well within regulatory requirements.
This week, Central 1 said its board of directors approved the distribution of $50 million to members by way of a redemption of Class A shares, a redemption of Class E shares and a dividend on its Class A shares.
“We are focused on serving the needs of our members while prudently managing risk,” Brent Clode, Central 1’s chief investment officer, said in a statement. “These regulatory changes reflect Central 1’s capital and risk management capabilities and good relationship with our regulator. We are very pleased to provide this benefit to our Class A shareholders.”
On Sept. 8, Central 1’s board approved the following distribution formula, on or before Sept. 30:
- a redemption of $30 million of Class A shares at a redemption value of $1 per share;
- a dividend declared on the Class A shares in the aggregate amount of $5 million; and,
- a redemption of 150,000 Class E shares at a redemption value of $100 per share.
Earlier this year, on April 28, Central 1’s members approved amendments to its rules creating Class F Shares. If these rule amendments are approved by FICOM, Central 1 intends to issue Class F shares, the proceeds of which will be used to capitalize the MLP. Management said it anticipates that, subject to approval by Central 1’s board, the credit union will redeem additional Class E shares following the initial issuance of Class F shares.