Featured Product

    OSFI Decides to Keep Domestic Stability Buffer for D-SIBs Unchanged

    June 23, 2020

    OSFI announced its decision to maintain the Domestic Stability Buffer at 1% of total risk-weighted assets. The buffer remains unchanged from the level set on March 13, 2020 as part of the response of OSFI to the COVID-19 crisis. The buffer is calculated as described under the Capital Adequacy Requirements (CAR) Guideline and is intended for the six largest banks that have been designated as domestic systemically important banks, or D-SIBs, in Canada.

    In March 2020, the Domestic Stability Buffer was lowered by 1.25% to provide banks with additional lending capacity during the COVID-19 crisis. OSFI expects banks to continue to draw on this capacity to support Canadian businesses and households. The decision to keep the buffer unchanged reflects the OSFI assessment that the current Domestic Stability Buffer level remains effective in supporting the resilience of the Canadian banking system and the overall economy. OSFI expects banks to continue to draw on this capacity to support Canadian businesses and households. The Domestic Stability Buffer requires six largest banks in Canada to set aside a portion of their capital during good times so they can draw down on that reserve in times of economic stress. As of June 2020, the federally regulated financial institutions that have been designated as domestic systemically important banks are Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank.

    OSFI reviews and sets the level of the Domestic Stability Buffer on a semi-annual basis (June and December), based on its ongoing monitoring of federally regulated financial institutions as well as system-wide and sectoral developments. When OSFI lowered the Domestic Stability Buffer on March 13, it committed that any increases to the buffer will not take effect for at least 18 months. The largest banks in Canada entered this downturn from a position of strength and both the quantity and quality of their capital remains strong. Fiscal and monetary policy responses have also helped to cushion the impact of the pandemic. However, vulnerabilities in the financial system remain elevated and the pace of economic recovery is difficult to predict. The pandemic has added pressure on highly indebted households and businesses while asset imbalances remain elevated. Lower global growth also presents the possibility that some external risks could spill over into the Canadian financial system. 

     

    Related Links

    Keywords: Americas, Canada, Banking, Domestic Stability Buffer, COVID-19, Regulatory Capital, D-SIBs, Basel, OSFI

    Featured Experts
    Related Articles
    News

    ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks

    ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.

    September 18, 2020 WebPage Regulatory News
    News

    EBA Provides Opinion on Definition of Credit Institution in CRR

    EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).

    September 18, 2020 WebPage Regulatory News
    News

    APRA Consults on Alignment of Daily Liquidity Report for Banks

    APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.

    September 17, 2020 WebPage Regulatory News
    News

    FED Releases Scenarios for Second Round of Stress Tests on Banks

    FED released hypothetical scenarios for a second round of stress tests for banks.

    September 17, 2020 WebPage Regulatory News
    News

    PRA Announces Update on Supervisory Benchmarking Portfolio Exercise

    PRA published updates in relation to the 2021 Supervisory Benchmarking Portfolio exercise.

    September 14, 2020 WebPage Regulatory News
    News

    FED Revises and Extends Capital Assessment and Stress Testing Reports

    FED adopted a proposal to extend for three years, with revision, the capital assessments and stress testing reports (FR Y-14A/Q/M; OMB No. 7100-0341).

    September 14, 2020 WebPage Regulatory News
    News

    HKMA Updates Policy Module for Non-Centrally Cleared OTC Derivatives

    HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.

    September 11, 2020 WebPage Regulatory News
    News

    EBA Updates List of Validation Rules for Reporting by Banks

    EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.

    September 10, 2020 WebPage Regulatory News
    News

    EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework

    EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).

    September 10, 2020 WebPage Regulatory News
    News

    NGFS Advocates Environmental Risk Analysis for Financial Sector

    NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.

    September 10, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5803