Featured Product

    OSFI Decides to Keep Domestic Stability Buffer for D-SIBs Unchanged

    June 23, 2020

    OSFI announced its decision to maintain the Domestic Stability Buffer at 1% of total risk-weighted assets. The buffer remains unchanged from the level set on March 13, 2020 as part of the response of OSFI to the COVID-19 crisis. The buffer is calculated as described under the Capital Adequacy Requirements (CAR) Guideline and is intended for the six largest banks that have been designated as domestic systemically important banks, or D-SIBs, in Canada.

    In March 2020, the Domestic Stability Buffer was lowered by 1.25% to provide banks with additional lending capacity during the COVID-19 crisis. OSFI expects banks to continue to draw on this capacity to support Canadian businesses and households. The decision to keep the buffer unchanged reflects the OSFI assessment that the current Domestic Stability Buffer level remains effective in supporting the resilience of the Canadian banking system and the overall economy. OSFI expects banks to continue to draw on this capacity to support Canadian businesses and households. The Domestic Stability Buffer requires six largest banks in Canada to set aside a portion of their capital during good times so they can draw down on that reserve in times of economic stress. As of June 2020, the federally regulated financial institutions that have been designated as domestic systemically important banks 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.

    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. When OSFI lowered the Domestic Stability Buffer on March 13, it committed that any increases to the buffer will not take effect for at least 18 months. The largest banks in Canada entered this downturn from a position of strength and both the quantity and quality of their capital remains strong. Fiscal and monetary policy responses have also helped to cushion the impact of the pandemic. However, vulnerabilities in the financial system remain elevated and the pace of economic recovery is difficult to predict. The pandemic has added pressure on highly indebted households and businesses while asset imbalances remain elevated. Lower global growth also presents the possibility that some external risks could spill over into the Canadian financial system. 

     

    Related Links

    Keywords: Americas, Canada, Banking, Domestic Stability Buffer, COVID-19, Regulatory Capital, D-SIBs, Basel, OSFI

    Featured Experts
    Related Articles
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699