OSFI Consults on Revisions to Capital Adequacy Requirements
OSFI is consulting on revisions to the Capital Adequacy Requirements (CAR) Guideline for implementation in the first quarter of 2018. Implementation is November 01, 2017 for institutions with an October 31 year-end and January 01, 2018 for institutions with a December 31 year-end. The revisions mainly relate to the treatment of allowances as a result of the expected adoption of IFRS 9 by deposit-taking institutions in 2018. To inform OSFI’s decision on the need for a transition (or phase-in) of the impact of IFRS 9, institutions that expect IFRS 9 to have a material impact on their capital position are requested to provide information on estimated impacts to OSFI during this consultation. Comments are due by September 29, 2017.
In addition to the changes related to IFRS 9 implementation, OSFI also provides clarifications throughout the CAR Guideline in response to questions received from the industry as part of the regular housekeeping process. With respect to the domestic implementation of the Standardized Approach to Counterparty Credit Risk (SA-CCR) and the revisions to the capital requirements for bank exposures to central counterparties, OSFI has chosen to extend the implementation timeline of these requirements, given that the timing for implementation of these rules by the majority of key competitors in foreign markets is more likely to occur after January 2018. However, OSFI will require institutions to start reporting amounts under SA-CCR beginning in the first quarter of 2018. OSFI intends to implement these rules in the first quarter of 2019, subject to confirming the implementation readiness of key foreign market counterparties during 2018. This information will be collected as part of the BCAR regulatory return through the introduction of an additional schedule.
Furthermore, OSFI announced that it expects to implement the securitization framework, which was released by BCBS in July 2016, in the first quarter of 2019. This extended timeline will allow to reflect the treatment related to simple, transparent, and comparable (STC) criteria for short-term securitization exposures, which is yet to be finalized by BCBS. Thus, the existing securitization treatment specified in the CAR Guideline will remain in place through the end of the 2018 fiscal year.
Related Links
Guideline Impact Analysis Statement
Comment Due Date: September 29, 2017
Keywords: Americas, Canada, Banking, IFRS 9, CAR, SA CCR, STC Securitization, Guideline A, OSFI
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