Featured Product

    OSFI Consults on Applying Proportionality to Pillar 1 Rules in Canada

    July 11, 2019

    OSFI published a discussion paper seeks input on possible tailoring of the capital and liquidity requirements for small and medium-size deposit-taking institutions. The discussion paper outlines proposals for the segmentation of small and medium-size banks and the application of more tailored capital and liquidity requirements. Comment period on the consultation ends on September 27, 2019. In this phase, which is phase 1, focus is on the Pillar 1 minimum requirements. Subsequent phases of this exercise will focus on the Pillar 2 (prudential and risk management expectations) and Pillar 3 (public disclosure) requirements, which will be the subject of future consultations.

    The discussion paper provides a summary of the four categories of small and medium-size deposit-taking institutions, including the criteria for segmentation and characteristics of institutions that will fall into each category. Pillar 1 requirements, which the consultation addresses, include the Capital Adequacy Requirements Guideline, the Leverage Requirements Guideline, and the Liquidity Adequacy Requirements Guideline. These guidelines are more rules-based in nature, which allows comparability and ensures consistent application across deposit-taking institutions. However, given the varying nature and complexity of deposit-taking institutions, the ratios produced by these requirements (for example, risk-based capital ratios, leverage ratio, liquidity coverage ratio) may not be the best measure of the risks faced by all small and medium-size institutions. To address this concern, OSFI is assessing how the existing capital and liquidity requirements can be modified for some small and medium-size institutions and is exploring alternative measures to assess the adequacy of capital and liquidity.

    The current frameworks already incorporate some simpler options for smaller, less complex institutions (for example, flat risk-weights that can be applied to determine the credit risk capital held against certain assets). However, there may be a need to develop additional, simpler approaches for use by smaller or less risky institutions. In addition, the standardized approaches may not be sufficiently risk-sensitive to capture the risks associated with exposures in certain asset classes (for example, real estate). In these instances, OSFI will look to develop more risk-sensitive approaches that can be used to better capture the risk to which the small and medium-size institutions are exposed. Part of the work to assess the Pillar 1 requirements for small and medium-size deposit-taking institutions will involve the assessment of the current regulatory reporting regime, including the content and frequency of regulatory reporting. 

    This initiative, which is one of the key priorities identified in the Strategic Plan 2019–2022 of OSFI, will explore revisions to the capital and liquidity frameworks to better reflect the size, nature, complexity, and business activities of small and medium-size deposit-taking institutions. As new capital and liquidity standards are developed internationally and implemented domestically, OSFI is focused on ensuring that its capital and liquidity regime remains appropriate for these smaller, less complex organizations.

     

    Related Links

    Comment Due Date: September 27, 2019

    Keywords: Americas, Canada, Banking, Basel III, Proportionality, Reporting, Pillar 1, Regulatory Capital, LCR, Leverage Ratio, OSFI

    Featured Experts
    Related Articles
    News

    BaFin Publishes Submission Deadlines Under Solvency II

    BaFin published quarterly and annual submission deadlines on the Solvency II reporting page on its website.

    February 25, 2020 WebPage Regulatory News
    News

    RBNZ to Address Cyber Risk Through Risk Management Guidance

    RBNZ announced that it is strengthening its efforts to enhance resilience of the financial system from cyber threats, including developing risk management guidance and promoting information-sharing in collaboration with industry and other public organizations.

    February 25, 2020 WebPage Regulatory News
    News

    FSI Convened Meeting on Climate Risk Assessment in Financial Sector

    The Financial Stability Institute (FSI) of BIS issued a summary of the meeting held in Basel from February 20-21, 2020.

    February 24, 2020 WebPage Regulatory News
    News

    BCBS Updates Basel III Monitoring Workbook in February 2020

    BCBS updated the workbook for Basel III monitoring to version 4.1.2, for the collection of December 2019 data.

    February 24, 2020 WebPage Regulatory News
    News

    Bank of Finland Updates Validation Checks for AnaCredit Reporting

    Bank of Finland published Version 1.8 of the validation checks for credit data collection under the AnaCredit Regulation.

    February 24, 2020 WebPage Regulatory News
    News

    APRA Plans to Assess Climate Risks and Develop Prudential Guidance

    APRA published a letter that outlines its plans to undertake a climate change vulnerability assessment and develop a prudential practice guide focused on climate-related financial risks.

    February 24, 2020 WebPage Regulatory News
    News

    FDIC Publishes Guide to Help with Third-Party Risk Management

    The technology lab of FDIC (FDiTech) published a new guide to help financial technology, or fintech, companies and others partner with banks.

    February 24, 2020 WebPage Regulatory News
    News

    PRA Removes References to LIBOR in SoP on Pillar 2 Capital and SS20/15

    PRA published a policy statement (PS3/20) that provides updates to certain supervisory statements (SS20/15, SS28/15, and SS35/15) and statements of policy (SoP).

    February 24, 2020 WebPage Regulatory News
    News

    APRA to Transition to Annual Stress Testing of Large Banks in 2020

    APRA published key findings of the stress testing assessment conducted on authorized deposit-taking institutions.

    February 21, 2020 WebPage Regulatory News
    News

    BoE Updates Version 1.1.0 of Taxonomy for Form AS and Form FV

    BoE published the statistical notice 2020/01 that provides an update to Version 1.1.0 of the taxonomy for forms AS (MFI holdings of securities collection) and FV (Financial Vehicle Corporations return) and the associated validation rules.

    February 21, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4729