Featured Product

    OSFI Raises the Domestic Stability Buffer for Canadian D-SIBs

    June 04, 2019

    OSFI has decided to set the level of the Domestic Stability Buffer at 2.00% of total risk-weighted assets, as calculated under the Capital Adequacy Requirements Guideline. The buffer has been set at this level, with effect from October 31, 2019. The Domestic Stability Buffer applies only to the federally regulated financial institutions that have been designated as domestic systemically important banks (D-SIBs).

    In December 2018, the Domestic Stability Buffer had been set at 1.75%, with effect from April 30, 2019. As of June 2019, the federally regulated financial institutions that have been designated as D-SIBs are Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank. This increase in the buffer (to 2%) reflects the OSFI assessment that, on balance, the identified systemic vulnerabilities to D-SIBs in Canada remain elevated while economic conditions continue to be accommodative. The key vulnerabilities include Canadian household indebtedness, asset imbalances in the Canadian market, and Canadian institutional indebtedness. Household debt-to-income ratio has remained high since the last domestic stability buffer decision, housing market uncertainty remains elevated, and risks related to non-financial corporate debt have continued to grow. Against this backdrop, a favorable credit environment and stable economic conditions continue to provide a window of opportunity for D-SIBs to increase their capital holdings. 

    The Domestic Stability Buffer contributes to D-SIBs' resilience to key vulnerabilities and system-wide risks, thus contributing to financial stability. OSFI reviews and sets the level of the Domestic Stability Buffer on a semi-annual basis (June and December), based on its ongoing monitoring of federally regulated financial institutions as well as system-wide and sectoral developments. Decisions on the calibration of the buffer are based on the OSFI supervisory judgment, are informed by its monitoring and analytical work on a range of vulnerabilities, and are made in consultation with the federal financial regulatory partners of OSFI. OSFI applies a variety of qualitative analysis and quantitative tools to the determination of the buffer, including consideration of exposure trends, financial and macro economic indicators, stress testing and other supervisory information.

     

    Related Links

    Keywords: Americas, Canada, Banking, Basel III, Domestic Stability Buffer, D-SIBs, Capital Adequacy, Systemic Risk, OSFI

    Featured Experts
    Related Articles
    News

    EBA Proposes Guidelines for Establishing Intermediate Parent Entities

    EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.

    January 15, 2021 WebPage Regulatory News
    News

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Technical Package on Reporting Framework 3.0

    EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.

    January 14, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets

    APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Publishes Risk Dashboard for Third Quarter of 2020

    EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro

    ECB concluded the public consultation on the introduction of a digital euro in EU.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro

    ECB concluded the public consultation on the introduction of a digital euro in EU.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Finalizes Guide on Supervisory Approach to Bank Consolidation

    ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.

    January 12, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6432