General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
January 12, 2018

OSFI revised the capital floor that will set a minimum on the required regulatory capital for banks using internal models, relative to the Basel II standardized approach. The capital floor will be implemented effective second quarter of 2018, with the floor factor transitioned in over three quarters. The floor factor will be set at 70.0% in the second quarter of 2018, increasing to 72.5% in the third and 75% in the fourth quarter of 2018. The capital floor will be further updated over time, as changes are made to the OSFI capital framework.

As a BCBS member, OSFI participated in the development and finalization of the Basel III reforms, which include replacement of the existing capital floor with a more robust, risk-sensitive output floor, based on the Basel III standardized approaches. Given that the proposed implementation of the Basel III output floor and revised standardized approaches is not expected to begin before 2022, this interim step will improve risk-sensitivity while ensuring the objectives of the capital floor continue to be met. The detailed description of the revised capital floor is mentioned in Annex 1. The revised floor must be reported in the Basel Capital Adequacy Reporting (BCAR) regulatory return as of second quarter of 2018, according to the instructions provided in Annex 2. Changes will be made to the BCAR return to reflect the revised floor for the first quarter of 2019. 

The revisions apply to banks, bank holding companies, federally regulated trust and loan companies, and cooperative retail associations. Capital floors and their associated disclosure requirements support the credibility and comparability of risk-weighted capital calculations. 

 

Related Link: OSFI Letter

Keywords: Americas Canada, Banking, Basel III, Capital Floor, Regulatory Capital, BCAR, CAR, Credit Risk, BCBS, OSFI

Related Insights
News

OSFI Proposes Changes to Guideline on Large Exposure Limits

OSFI proposed revisions to the Guideline B-2 on Large Exposure Limits, for implementation in the first quarter of 2020.

December 13, 2018 WebPage Regulatory News
News

BCBS Consults on Disclosure Rules for Leverage Ratio Window-Dressing

BCBS published a consultative document on revisions to the leverage ratio disclosure requirements to address the leverage ratio window-dressing behavior.

December 13, 2018 WebPage Regulatory News
News

PRA Updates the Policy on Approach to Systemic Risk Buffer

PRA published the final Statement of Policy on the PRA approach to the implementation of the systemic risk buffer (SRB), as proposed in the consultation paper CP29/18.

December 13, 2018 WebPage Regulatory News
News

EP Report Examines Financial Supervision and Regulation in US

European Parliament published a report that provides a concise overview of the Dodd-Frank Act, the challenges of its implementation, and efforts to roll back the Act, in large part due to what are viewed to be vague and impractical provisions.

December 12, 2018 WebPage Regulatory News
News

EBA Finalizes Guidelines on the STS Criteria in Securitization

EBA published the final guidelines that provide a harmonized interpretation of the criteria for a securitization to be eligible as simple, transparent, and standardized (STS) on a cross-sectoral basis throughout EU.

December 12, 2018 WebPage Regulatory News
News

OSFI Sets Domestic Stability Buffer for D-SIBs at 1.75%

OSFI set the level for the Domestic Stability Buffer at 1.75% of total risk-weighted assets, as calculated under the Capital Adequacy Requirements (CAR) Guideline.

December 12, 2018 WebPage Regulatory News
News

FSI Publishes Paper on Proportionality in Insurance Solvency Rules

FSI published a paper on proportionality in the application of insurance solvency requirements.

December 11, 2018 WebPage Regulatory News
News

BCBS Updates Framework for Pillar 3 Disclosure Requirements

BCBS published the updated framework for Pillar 3 disclosure requirements.

December 11, 2018 WebPage Regulatory News
News

EBA Issues Revised List of Validation Rules for Reporting

EBA revised the list of validation rules in its implementing technical standards on supervisory reporting.

December 11, 2018 WebPage Regulatory News
News

IMF Reports Assess the Stability of Financial System in Brazil

IMF published a report on the results of the Financial System Stability Assessment (FSSA) on Brazil.

December 11, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2330