Featured Product

    OSFI Revises the Capital Floor for Banks

    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

    Featured Experts
    Related Articles
    News

    APRA Publishes Proposal to Increase Transparency of Banking Data

    APRA proposed to substantially increase the volume and breadth of data it makes publicly available on authorized deposit-taking institutions, including banks, credit unions, and building societies.

    December 05, 2019 WebPage Regulatory News
    News

    ESMA Consults on Guide to Internal Controls for Credit Rating Agencies

    ESMA launched a consultation on the guidelines on internal controls for credit rating agencies (CRAs).

    December 05, 2019 WebPage Regulatory News
    News

    EU Finalizes Directive and Prudential Rules for Investment Firms

    EU published, in the Official Journal of the European Union, the Directive (2019/2034) and Regulation (2019/2033) on the prudential requirements and supervision of investment firms.

    December 05, 2019 WebPage Regulatory News
    News

    OSFI Revises Guideline on Principles for Management of Liquidity Risk

    OSFI finalized Guideline B-6 on the principles for the management of liquidity risk.

    December 05, 2019 WebPage Regulatory News
    News

    PRA Consults on Framework to Manage Outsourcing and Third-Party Risk

    PRA published a consultation paper CP30/19 that sets out proposals to modernize the regulatory framework on outsourcing and third-party risk management.

    December 05, 2019 WebPage Regulatory News
    News

    BoE, PRA, and FCA Consult to Strengthen Operational Resilience

    BoE, PRA, and FCA published a shared policy summary and coordinated consultation papers on new requirements to strengthen operational resilience in the financial services sector.

    December 05, 2019 WebPage Regulatory News
    News

    EC Amends Rule on Mapping of External Credit Assessment Institutions

    EC published the implementing regulation (EU) 2019/2028, which amends Regulation 2016/1799, regarding the mapping tables specifying correspondence between the credit risk assessments of external credit assessment institutions (ECAIs) and the credit quality steps set out in the Capital Requirements Regulation.

    December 04, 2019 WebPage Regulatory News
    News

    EBA Issues Second Part of Advice on Implementation of Basel III in EU

    EBA published the second part of its advice on the implementation of Basel III in EU, which complements the report published on August 05, 2019.

    December 04, 2019 WebPage Regulatory News
    News

    EU Approves European Council Proposal on CCP Recovery and Resolution

    EU ambassadors approved the position of European Council on a proposed framework for clearing houses and their authorities to prepare for and deal with financial difficulties.

    December 04, 2019 WebPage Regulatory News
    News

    OSFI Releases Guideline on Foreign Bank Branch Deposit Requirements

    OSFI released the final version of Guideline A-10 on foreign bank branch deposit requirements, along with guideline impact analysis statement.

    December 04, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4268