OSFI Announces Regulatory Adjustments to Support COVID-19 Efforts
OSFI published three targeted industry letters that announce a series of regulatory adjustments to support the financial and operational resilience of federally regulated banks, insurers, and private pension plans in the light of COVID-19. This includes adjusting a number of regulatory capital, liquidity, and reporting requirements. These measures, along with the delays in previously planned regulatory changes, are designed to help reduce some of the operational stress on institutions. They are also intended to ensure that the OSFI guidance is appropriate for these extraordinary circumstances while remaining risk-focused and forward-looking.
Key measures for banks involve
- Adjusting capital and liquidity measures so that they are suited for unprecedented circumstances
- Delaying implementation of measures of the Basel III international capital standard until 2023 consistent with the decision of BCBS oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS)
- Determining under regulatory capital requirements, that bank loans subject to payment deferrals, such as mortgage loans, small business loans and retail loans, will continue to be treated as performing loans
- Delaying the implementation of revised minimum capital and liquidity requirements for small and medium-size banks until 2023
- Providing guidance on applying IFRS 9 during this extraordinary period, including addressing the significant increase in credit risk and sufficient and timely disclosures
- Lowering the Domestic Stability Buffer by 1.25 percentage points to 1%
Key measures for insurers involve
- Specifying that under regulatory capital requirements, payment deferrals will not cause insured mortgages to be treated as delinquent or in arrears, consistent with expectations for financial institutions
- Suspending semi-annual progress reporting on the implementation of new accounting standards, notably, IFRS 17
- Suspending all of its consultations and policy development on new or revised guidance until conditions stabilize
Key measures for private pension plans include
- Temporarily freezing portability transfers and annuity purchases to protect the benefits of plan members and beneficiaries
- Extending deadlines for certain actions and annual filings to allow plans more flexibility to focus on issues at hand
Related Links
Keywords: Americas, Canada, Banking, Insurance, Pensions, COVID-19, Operational Resilience, Regulatory Capital, Credit Risk, IFRS 9, IFRS 17, Domestic Stability Buffer, OSFI
Featured Experts
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
EP Report Examines Financial and Regulatory Challenges of Green DealRelated Articles
HKMA Consults on Supervisory Policy for OTC Derivatives Transactions
HKMA is consulting on revisions to the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.
PRA on Regulatory Capital and IFRS 9 Requirements for Payment Holidays
PRA provided further information on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address the challenges arising from COVID-19 outbreak.
HKMA on Fintech Adoption and Innovation by Banks in Hong Kong
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS on Impact of Increasing Use of Cloud Technology on Cyber Risk
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB Consults on Guide for Managing Climate and Environmental Risks
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB Issues Opinion on Revisions to CRR in Response to COVID Crisis
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA Assesses Interlinkages Between Recovery and Resolution Planning
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB Publishes Final MREL Policy Under the Banking Package
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
US Agencies Amend Interim Final Rule on Transition Period for CECL
US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.
ECB Releases Results of March Survey on Credit Terms and Conditions
ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.
