OSFI to Implement Operational Risk Capital Rules for Banks in Q1 2022
OSFI decided to move domestic implementation of the revised Basel III operational risk capital requirements from the first quarter of 2021 to the first quarter of 2022. This revised implementation date coincides with the implementation of the final Basel III credit risk and leverage ratio requirements. OSFI has made this announcement in a letter addressed to banks, bank holding companies, and federally regulated trust and loan companies.
The re-alignment provides several benefits including additional time to clarify reporting instructions, with the objective of ensuring a consistent interpretation of the revised requirements. It also aligns with the expected implementation date of the revised capital and liquidity requirements for small and medium-size institutions. Deposit-taking institutions that previously used the Advanced Measurement Approach, or AMA, for operational risk capital purposes should continue to use the standardized approach until the first quarter of 2022. Other institutions should also continue to use the approach they are currently using (either Standardized or Basic Indicator) until the first quarter of 2022.
Further consultation related to the 2022 domestic implementation of the final Basel III reforms, through the OSFI Capital Adequacy Requirements (CAR) for operational risk and credit risk and the leverage requirements guideline, will take place in late spring 2020. This consultation, in addition to the consultative document on small and medium-size institution capital and liquidity requirements, will provide more detail on the expected operational risk capital requirements that will apply to deposit-taking institutions starting in 2022.
Related Link: News Release
Keywords: Americas, Canada, Banking, Operational Risk, Basel III, Reporting, Capital Adequacy Requirements, OSFI
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
US Agencies Extend Volcker Rule Consultation, Clarify Mortgage RulesRelated 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.