OSFI Released Draft Guideline on TLAC for D-SIBs in Canada
OSFI released, for comment, a draft guideline on total loss-absorbing capacity (TLAC). This guideline will apply to the domestic systemically important banks (D-SIBs) in Canada, as part of the Federal government’s Bank Recapitalization (Bail-in) Regime. OSFI is issuing its draft TLAC guideline in conjunction with the pre-publication of certain bail-in regulations by the Department of Finance. The deadline for submitting comments on the draft TLAC guideline is July 17, 2017.
The draft TLAC guideline of OSFI is consistent with the FSB's TLAC standard for global systemically important banks (G-SIBs), but is tailored to the Canadian context. FSB published its final TLAC standard for G-SIBs in November 2015. Public disclosure of D-SIBs’ TLAC ratios will begin for the fiscal quarter commencing on November 01, 2018; however, D-SIBs will have until November 01, 2021 to fully meet the TLAC requirements. OSFI will release the final TLAC guideline later this year. The TLAC framework, which Canada is extending to its six largest banks, is designed to ensure that a systemically important bank has sufficient loss-absorbing capacity to support its recapitalization in the unlikely event of its failure. The framework would facilitate an orderly resolution of a bank to allow it to remain open and operating without requiring public funds or threatening financial stability.
Moreover, the regulatory capital adjustments for the treatment of TLAC holdings are being implemented through revisions to OSFI’s Capital Adequacy Requirements (CAR) guideline. The draft changes will align OSFI’s expectations with the Basel Committee on Banking Supervision’s standard on the regulatory capital treatment of banks’ holdings of TLAC instruments. OSFI is proposing to extend the Basel III standard to the TLAC holdings issued by Canadian D-SIBs. These changes will be effective in 2018. Along with the Capital Adequacy Requirements (CAR) guideline and the Leverage Requirements guideline, the proposed TLAC guideline will provide OSFI with a robust framework to assess a D-SIB’s minimum capacity to absorb losses. The deadline for submitting comments on the revisions to the CAR guideline is also July 17, 2017.
Related Links
Basel Standard on TLAC Holdings
Keywords: Americas, OSFI, Banking, TLAC, Basel III, CAR, Canada
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
ESMA Updates Q&A and Lists Liquid Contracts on Commodity DerivativesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.