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

    ECA Recommends Actions to Enhance Resolution Planning for Banks

    EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.

    January 20, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules on Identity Verification of Depositor Protection

    PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).

    January 20, 2021 WebPage Regulatory News
    News

    BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK

    BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.

    January 20, 2021 WebPage Regulatory News
    News

    FED Revises Capital Planning and Stress Testing Requirements for Banks

    FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.

    January 19, 2021 WebPage Regulatory News
    News

    ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020

    ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.

    January 19, 2021 WebPage Regulatory News
    News

    ESAs Publish Reporting Templates for Financial Conglomerates

    ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.

    January 18, 2021 WebPage Regulatory News
    News

    EBA Publishes Report on Asset Encumbrance of Banks in EU

    EBA published the annual report on asset encumbrance of banks in EU.

    January 18, 2021 WebPage Regulatory News
    News

    FCA Proposes Guidance on Mortgage and Consumer Credit Repossessions

    FCA proposed two sets of guidance on the approaches to mortgage repossessions and consumer credit repossessions, with comment period ending on January 18, 2021.

    January 18, 2021 WebPage Regulatory News
    News

    MAS Revises Guidelines on Technology Risk Management

    MAS revised the guidelines that address technology and cyber risks of financial institutions, in an environment of growing use of cloud technologies, application programming interfaces, and rapid software development.

    January 18, 2021 WebPage Regulatory News
    News

    US Agencies Publish Updates for Call Reports, FFIEC 101, and FR Y-9C

    FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.

    January 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6475