Featured Product

    OSFI Consults on Applying Proportionality to Pillar 1 Rules in Canada

    July 11, 2019

    OSFI published a discussion paper seeks input on possible tailoring of the capital and liquidity requirements for small and medium-size deposit-taking institutions. The discussion paper outlines proposals for the segmentation of small and medium-size banks and the application of more tailored capital and liquidity requirements. Comment period on the consultation ends on September 27, 2019. In this phase, which is phase 1, focus is on the Pillar 1 minimum requirements. Subsequent phases of this exercise will focus on the Pillar 2 (prudential and risk management expectations) and Pillar 3 (public disclosure) requirements, which will be the subject of future consultations.

    The discussion paper provides a summary of the four categories of small and medium-size deposit-taking institutions, including the criteria for segmentation and characteristics of institutions that will fall into each category. Pillar 1 requirements, which the consultation addresses, include the Capital Adequacy Requirements Guideline, the Leverage Requirements Guideline, and the Liquidity Adequacy Requirements Guideline. These guidelines are more rules-based in nature, which allows comparability and ensures consistent application across deposit-taking institutions. However, given the varying nature and complexity of deposit-taking institutions, the ratios produced by these requirements (for example, risk-based capital ratios, leverage ratio, liquidity coverage ratio) may not be the best measure of the risks faced by all small and medium-size institutions. To address this concern, OSFI is assessing how the existing capital and liquidity requirements can be modified for some small and medium-size institutions and is exploring alternative measures to assess the adequacy of capital and liquidity.

    The current frameworks already incorporate some simpler options for smaller, less complex institutions (for example, flat risk-weights that can be applied to determine the credit risk capital held against certain assets). However, there may be a need to develop additional, simpler approaches for use by smaller or less risky institutions. In addition, the standardized approaches may not be sufficiently risk-sensitive to capture the risks associated with exposures in certain asset classes (for example, real estate). In these instances, OSFI will look to develop more risk-sensitive approaches that can be used to better capture the risk to which the small and medium-size institutions are exposed. Part of the work to assess the Pillar 1 requirements for small and medium-size deposit-taking institutions will involve the assessment of the current regulatory reporting regime, including the content and frequency of regulatory reporting. 

    This initiative, which is one of the key priorities identified in the Strategic Plan 2019–2022 of OSFI, will explore revisions to the capital and liquidity frameworks to better reflect the size, nature, complexity, and business activities of small and medium-size deposit-taking institutions. As new capital and liquidity standards are developed internationally and implemented domestically, OSFI is focused on ensuring that its capital and liquidity regime remains appropriate for these smaller, less complex organizations.

     

    Related Links

    Comment Due Date: September 27, 2019

    Keywords: Americas, Canada, Banking, Basel III, Proportionality, Reporting, Pillar 1, Regulatory Capital, LCR, Leverage Ratio, OSFI

    Featured Experts
    Related Articles
    News

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    News

    HM Treasury Announces G7 Agreement on Green Agenda Ahead of COP26

    HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6821