OSFI Announces Regulatory Adjustments to Support COVID-19 Efforts
OSFI published three targeted industry letters that announce a series of regulatory adjustments to support the financial and operational resilience of federally regulated banks, insurers, and private pension plans in the light of COVID-19. This includes adjusting a number of regulatory capital, liquidity, and reporting requirements. These measures, along with the delays in previously planned regulatory changes, are designed to help reduce some of the operational stress on institutions. They are also intended to ensure that the OSFI guidance is appropriate for these extraordinary circumstances while remaining risk-focused and forward-looking.
Key measures for banks involve
- Adjusting capital and liquidity measures so that they are suited for unprecedented circumstances
- Delaying implementation of measures of the Basel III international capital standard until 2023 consistent with the decision of BCBS oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS)
- Determining under regulatory capital requirements, that bank loans subject to payment deferrals, such as mortgage loans, small business loans and retail loans, will continue to be treated as performing loans
- Delaying the implementation of revised minimum capital and liquidity requirements for small and medium-size banks until 2023
- Providing guidance on applying IFRS 9 during this extraordinary period, including addressing the significant increase in credit risk and sufficient and timely disclosures
- Lowering the Domestic Stability Buffer by 1.25 percentage points to 1%
Key measures for insurers involve
- Specifying that under regulatory capital requirements, payment deferrals will not cause insured mortgages to be treated as delinquent or in arrears, consistent with expectations for financial institutions
- Suspending semi-annual progress reporting on the implementation of new accounting standards, notably, IFRS 17
- Suspending all of its consultations and policy development on new or revised guidance until conditions stabilize
Key measures for private pension plans include
- Temporarily freezing portability transfers and annuity purchases to protect the benefits of plan members and beneficiaries
- Extending deadlines for certain actions and annual filings to allow plans more flexibility to focus on issues at hand
Related Links
Keywords: Americas, Canada, Banking, Insurance, Pensions, COVID-19, Operational Resilience, Regulatory Capital, Credit Risk, IFRS 9, IFRS 17, Domestic Stability Buffer, OSFI
Featured Experts
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
IFRS Publishes Statement on Its Work During the COVID-19 CrisisRelated Articles
ESAs Issue Multiple Regulatory Updates for Financial Sector Entities
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
EBA Finalizes Methodology for Stress Tests, Issues Other Updates
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
OSFI Sets Out Work Priorities and Reporting Updates for Banks
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
APRA Finalizes Changes to Capital Framework, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
BIS Hub and Central Banks Conduct CBDC and DeFI Pilots
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)
EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation
The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)
