OSFI issued orders to the six largest banks in Canada to legally designate them as domestic systemically important banks (D-SIBs). The six banks are Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank. Orders were also issued to each D-SIB to set the minimum risk-based total loss-absorbing capacity (TLAC) ratio at 21.5% of risk-weighted assets and the minimum TLAC leverage ratio at 6.75%.
The Royal Bank of Canada (RBC) was recently designated as a G-SIB by FSB. This G-SIB designation does not affect the application of Bail-in Regime to RBC or its designation as a Canadian D-SIB. As part of the implementation of the statutory Bail-in Regime and OSFI’s TLAC guideline, the Bank Act was amended on June 21, 2016 to give responsibility for the designation of D-SIBs to OSFI. Under the Bank Act amendments, OSFI is also responsible for setting the minimum TLAC for D-SIBs. The Government of Canada has developed a comprehensive risk management framework for D-SIBs. The recent Bail-in Regime and TLAC requirements were the final components of the framework to be implemented. In the unlikely event of a failure, the framework would allow a bank to be recapitalized and to remain open and operating, without requiring public funds or threatening the financial stability in Canada.
Related Link: News Release
Keywords: Americas, Canada, Banking, D-SIBs, TLAC, Bail-in Regime, OSFI
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EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI published the key findings of a study on third-party risk management.
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.