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

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    July 08, 2020 WebPage Regulatory News
    News

    PRA Statement on Application of Matching Adjustment Amid Crisis

    PRA published a statement to insurers that clarifies the approach to application of the matching adjustment during COVID-19 crisis.

    July 07, 2020 WebPage Regulatory News
    News

    EBA Provides Clarity on Implementation of Certain COVID-19 Policies

    EBA published a report on the implementation of selected COVID-19 policies within the prudential framework for banking sector.

    July 07, 2020 WebPage Regulatory News
    News

    EC Consults on Revision of Network and Information Systems Directive

    EC launched a consultation to revise the network and information systems (NIS) Directive (2016/1148), which was adopted in July 2016 and is the first horizontal internal market instrument aimed at improving the resilience of the EU against cybersecurity risks.

    July 07, 2020 WebPage Regulatory News
    News

    PRA Statement on LIBOR Transition and PRA Resolution-Related Rules

    PRA published a statement that outlines its view on the implications of LIBOR transition for contracts in scope of the “Contractual Recognition of Bail-In” and “Stay in Resolution” parts of the PRA Rulebook.

    July 07, 2020 WebPage Regulatory News
    News

    PRA Issues Updates to Pillar 2A Capital Framework in UK

    PRA published the policy statement PS15/20 to reflect additional resilience associated with higher macro-prudential buffers in a standard risk environment with a reduction in Pillar 2A capital requirements.

    July 06, 2020 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    BCBS published the eighteenth progress report on implementation of the Basel III regulatory framework in member jurisdictions.

    July 06, 2020 WebPage Regulatory News
    News

    FCA Proposes Guidance to Further Support Consumer Credit Customers

    FCA announced proposals that would provide continued support for certain consumer credit products to users, who are facing a financial impact because of the exceptional circumstances arising from the COVID-19 pandemic.

    July 03, 2020 WebPage Regulatory News
    News

    ACPR Publishes Draft of Taxonomy RAN 1.4.0 for Solvency II Reporting

    ACPR published a draft version of taxonomy RAN 1.4.0_PWD1, along with the related documentation, for Solvency II reporting.

    July 03, 2020 WebPage Regulatory News
    News

    BCBS Amends Guidelines on Sound Management of AML/CFT Risks

    BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).

    July 02, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5445