OSFI to Implement Operational Risk Capital Rules for Banks in Q1 2022
OSFI decided to move domestic implementation of the revised Basel III operational risk capital requirements from the first quarter of 2021 to the first quarter of 2022. This revised implementation date coincides with the implementation of the final Basel III credit risk and leverage ratio requirements. OSFI has made this announcement in a letter addressed to banks, bank holding companies, and federally regulated trust and loan companies.
The re-alignment provides several benefits including additional time to clarify reporting instructions, with the objective of ensuring a consistent interpretation of the revised requirements. It also aligns with the expected implementation date of the revised capital and liquidity requirements for small and medium-size institutions. Deposit-taking institutions that previously used the Advanced Measurement Approach, or AMA, for operational risk capital purposes should continue to use the standardized approach until the first quarter of 2022. Other institutions should also continue to use the approach they are currently using (either Standardized or Basic Indicator) until the first quarter of 2022.
Further consultation related to the 2022 domestic implementation of the final Basel III reforms, through the OSFI Capital Adequacy Requirements (CAR) for operational risk and credit risk and the leverage requirements guideline, will take place in late spring 2020. This consultation, in addition to the consultative document on small and medium-size institution capital and liquidity requirements, will provide more detail on the expected operational risk capital requirements that will apply to deposit-taking institutions starting in 2022.
Related Link: News Release
Keywords: Americas, Canada, Banking, Operational Risk, Basel III, Reporting, Capital Adequacy Requirements, OSFI
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