Featured Product

    OSFI Outlines Capital Treatment for Some COVID-19 Mitigation Measures

    March 30, 2020

    OSFI issued a letter outlining how federally regulated banks should treat the new capital made available to small and medium-size enterprises (SME) through the recently announced government programs. The government of Canada announced, on March 27, 2020, that it is making additional investments to support Canadian businesses dealing with the economic impact of COVID-19. The OSFI letter sets out how these exposures should be treated by deposit-taking institutions under the Capital Adequacy Requirements and Leverage Requirements Guidelines.

    The OSFI letter is addressed to banks, bank holding companies, and federally regulated trust and loan companies. OSFI has specified the following capital treatment for each program:

    • Canada Emergency Business Account. Banks taking on these loans can exclude them from their risk-based capital and leverage ratios.
    • New Export Development Canada loan guarantee for SMEs. Banks taking on these loans would treat the portion of the loan backed by the government as a sovereign exposure, with the remaining portion treated as a loan to the borrower. The entire amount of the loan would be included in the leverage ratio calculation.
    • New Business Development Bank of Canada co-lending program for SMEs. Banks taking on these loans would need to account for the portion of the loan that they hold in their risk-based capital and leverage ratios.

    By announcing the capital treatment for loans made through these programs, OSFI is providing timely direction for institutions, financial markets, and borrowers. These and other responsive regulatory adjustments—such as the adjustment of a number of regulatory capital, liquidity, and reporting requirements in the banking, insurance, and pensions sectors and the ongoing supervisory vigilance—ensure that the OSFI guidance is appropriate for these extraordinary circumstances while remaining risk-focused and forward-looking. OSFI will continue to look for ways to ensure that its capital and liquidity requirements are fit-for-purpose during these extraordinary circumstances.

     

    Related Links

    Keywords: Americas, Canada, Banking, SME, COVID-19, Regulatory Capital, CAR Guidelines, Leverage Requirements Guideline, Basel III, OSFI

    Featured Experts
    Related Articles
    News

    PRA and FPC Finalize Changes to Leverage Ratio Framework in UK

    The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA

    October 08, 2021 WebPage Regulatory News
    News

    CFPB Proposes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.

    October 08, 2021 WebPage Regulatory News
    News

    PRA Decides to Maintain O-SII Buffers for Another Year

    The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.

    October 08, 2021 WebPage Regulatory News
    News

    FSB Report Assesses Implementation of Recommendations on Stablecoins

    The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.

    October 07, 2021 WebPage Regulatory News
    News

    APRA Updates Loan Serviceability Expectations for Home Lending

    In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.

    October 06, 2021 WebPage Regulatory News
    News

    CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.

    October 06, 2021 WebPage Regulatory News
    News

    EBA and EIOPA Set Out Work Priorities for 2022

    The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.

    October 05, 2021 WebPage Regulatory News
    News

    MFSA Issues Reporting Updates and Guidance for Banks

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.

    October 05, 2021 WebPage Regulatory News
    News

    EC Publishes Decision on List of Equivalent Third Countries Under CRR

    The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).

    October 04, 2021 WebPage Regulatory News
    News

    EC Rule on Contractual Recognition of Write-Down and Conversion Powers

    EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.

    October 04, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7552