General Information & Client Services
  • 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 17, 2018

OSFI issued a letter that provides feedback on the 2016-17 Internal Capital Adequacy Assessment Process (ICAAP) Submission. The letter also states that a formal ICAAP submission to OSFI is not required for 2018. The letter is addressed to deposit-taking institutions that are using the Basel standardized approach to credit risk.

Based on the review of the ICAAP assessments submitted in December 2016, OSFI identified a number of key themes:

  • Real Estate Downturn Stress Test. Results of the required real estate stress test varied, given the different methodologies and assumptions used by each institution. A number of standardized deposit-taking institutions reported immaterial real estate downturn impact relative to their uninsured mortgage portfolio. OSFI encourages institutions to reassess their results for reasonability, given the nature of their respective portfolio and the overall impact on the level of impaired loans that would likely accompany a severe real estate downturn.
  • Assessment and Documentation of Risks. A number of ICAAPs did not provide sufficient detail on the risk assessment and quantification used to determine the internal capital target. Furthermore, rationale was not always provided in cases where the impact of stress test results was not factored into capital allocation.
  • Determination of Internal Capital Target. OSFI continues to observe misalignment of board-approved capital targets and ICAAP capital requirements for some standardized deposit-taking institutions.

OSFI expects that, in 2018, standardized deposit-taking institutions will update their ICAAP as part of their annual planning process, to assist the capital planning process, including the re-confirmation of internal capital targets. Furthermore, Lead Supervisors may request to review the ICAAP of an institution, as part of the ongoing supervisory process. Further communication will be sent to the industry in late 2018, providing more guidance on the next ICAAP submission as well as OSFI’s expectations of internal audit coverage for ICAAP and Basel Capital Adequacy Reporting (BCAR). OSFI has been informing standardized deposit-taking institutions of its expectations with respect to the Pillar 2 implementation, the submission requirements of ICAAP, and the expectations for internal audits of both the ICAAP and BCAR submissions. OSFI has received six rounds of ICAAP submissions to date.


Related Link: OSFI Letter

Keywords: Americas, Canada, ICAAP, BCAR, Pillar 2, Basel III, Stress Testing, OSFI

Related Insights
News

US Agencies Propose Rule on Appraisals for Real Estate Transactions

US Agencies (FDIC, FED, and OCC) proposed a rule to increase the threshold level at or below which appraisals would not be required for the residential real estate transactions from USD 250,000 to USD 400,000. Comments will be accepted for 60 days from publication in the Federal Register.

December 07, 2018 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for December 2018

This week one answer was published as part of the Single Rulebook Questions and Answers (Q&A).

December 07, 2018 WebPage Regulatory News
News

FED Updates Reporting Form and Instructions for FR Y-14Q

FED published the updated reporting form FR Y-14Q for Capital Assessment and Stress Testing, along with the associated instructions.

December 06, 2018 WebPage Regulatory News
News

PRA Finalizes Policy on Minor Amendments to Regulatory Reporting

PRA published the policy statement PS30/18, which contains the final policy following a consultation (CP16/18) on certain amendments to regulatory reporting.

December 05, 2018 WebPage Regulatory News
News

GM of BIS Examines Regulatory Implications of Big Tech in Finance

Agustín Carstens, the General Manager (GM) of BIS, during the keynote address at the FT Banking Summit in London, spoke about new challenges and policy implications of big tech in finance.

December 05, 2018 WebPage Regulatory News
News

ACPR Publishes Version 2.8.1 of the CRD IV Taxonomy

ACPR notified that version 2.8.1 of the Capital Requirements Directive (CRD) IV Data Point Model taxonomy and version 2.1.0 of the Anti-Money Laundering and Terrorist Financing (LCB-FT) taxonomy have been made available.

December 04, 2018 WebPage Regulatory News
News

European Council Endorses Package on CRD 5, CRR 2, BRRD 2, and SRMR 2

European Council endorsed the agreement achieved between the presidency and the Parliament on the key measures of a comprehensive legislative package aimed at reducing risks in the banking sector in EU.

December 04, 2018 WebPage Regulatory News
News

BCBS Report Examines Cyber Resilience Practices Across Jurisdictions

BCBS published a report that identifies, describes, and compares the range of observed bank, regulatory, and supervisory cyber-resilience practices across jurisdictions.

December 04, 2018 WebPage Regulatory News
News

EIOPA Publishes Q&A on Regulations and Guidelines

EIOPA published new sets of questions and answers (Q&A) on guidelines, implementing regulations, and delegated regulations applicable to insurers in Europe.

December 03, 2018 WebPage Regulatory News
News

ESMA Registers A.M. Best (EU) Rating Services as Credit Rating Agency

ESMA, the direct supervisor of credit rating agencies (CRAs) in EU, has registered A.M. Best (EU) Rating Services B.V. as a CRA under the CRA Regulation, with effect from December 03, 2018.

December 03, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2316