AMF Canada is revising guidelines for the treatment of deferred loans granted by the financial institutions and trust companies, in the context of the COVID-19 pandemic. The notice informs institutions that loans granted payment deferrals after September 30, 2020 will not be eligible for the special treatment. Earlier, in March 2020, AMF had authorized the concerned financial institutions to treat deferred loans as performing loans for regulatory purposes if the institution deemed that such loans, which were not in default when the deferral took effect, would have been performing loans (special treatment).
As per the announced revisions, loans granted payment deferrals before the publication of this notice will continue to be treated as performing loans under the Base Capital Adequacy Guideline applicable to financial services cooperatives (COOP GL) and the Capital Adequacy Guideline applicable to credit unions that are not member of a federation, trust companies, and savings companies (TCSC GL) for the duration of the deferral, up to a maximum of 6 months from the effective date of the deferral. Loans granted new payment deferrals between the publication of this notice and September 30 (inclusive) will be treated as performing loans under the Base Capital Adequacy Guideline applicable to financial services cooperatives (COOP GL) and the Capital Adequacy Guideline applicable to credit unions that are not member of a federation, trust companies, and savings companies for a maximum of 3 months from the effective date of the deferral. AMF also highlighted that it will continue to regularly monitor the COVID-19 situation and its impact on the concerned financial institutions and may adjust its guidance in respect of these measures if necessary.
Keywords: Americas, Quebec, Canada, Banking, COVID-19, Regulatory Capital, Payment Deferrals, Credit Risk, Basel, Loan Moratorium, AMF
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