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

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Reports Assess Impact of Pandemic on Financial Stability

    FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.

    November 17, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Implementation of Capital Review Changes

    RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.

    November 17, 2020 WebPage Regulatory News
    News

    IASB Announces Andreas Barckow as the New Chair from July 2021

    The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.

    November 17, 2020 WebPage Regulatory News
    News

    HKMA Consults on Capital Rules for Bank Equity Investments in Funds

    HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.

    November 17, 2020 WebPage Regulatory News
    News

    ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA

    ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).

    November 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6153