Featured Product

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    November 07, 2022

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work, an Information Sheet on the Residential Mortgage Underwriting Practices and Procedures Guideline (B-20), and the annual update to the Manual of Reporting Forms and Instructions for deposit-taking institutions. OSFI also announced that it has determined that the leverage ratio exclusion of central bank reserves is no longer necessary or fit-for-purpose; thus, starting from April 01, 2023, deposit-taking institutions will be required to include central bank reserves in their leverage ratio exposure measures.

    Reporting updates

    As part of the annual update on regulatory forms and instructions for deposit-takers, OSFI made changes to several forms and announced that the semi-annual filings which the Bank of Canada collects for the OTC Derivatives Survey (OT), which is collected on behalf of the Bank for International Settlements (BIS), and the Foreign Exchange Volume Survey, which is collected on behalf of the Canadian Foreign Exchange Committee (CFEC), will now be submitted via the Regulatory Reporting System (RRS) .OSFI made changes to the following regulatory reporting forms and instructions, effective for 2023 filing:

    • Basel Capital Adequacy Return (BCAR) (BA)
    • Leverage Requirements Return (LR)
    • Net Cumulative Cash Flow (NCCF) – new DT2
    • Balance Sheet (M4) – instructions only
    • Income Statement (P3)
    • Interbank and Major Exposures Return (EB/ET)
    • Balance Sheet by Booking Location (Z4)
    • Home Equity Lines of Credit (HELOCs) (J2)
    • Report on New and Existing Lending (A4)—Instructions only

    OSFI also published a new guideline on assurance on capital, leverage, and liquidity returns. This guideline applies to the capital returns of all federally regulated insurers as well as the capital, leverage, and liquidity returns of all federally regulated deposit-taking institutions. The guideline lays out a three-step approach to enhancing and aligning assurance expectations over capital, leverage, and liquidity returns, including an external audit opinion on the numerator and denominator of key regulatory ratios, senior management attestation on regulatory returns, and an internal audit opinion on the processes and controls followed in preparing these returns. The guideline seeks to inform external auditors and institutions on the work to be performed on their regulatory returns in an effort to enhance and align these expectations across all federally regulated financial institutions. The returns in scope for domestic systemically important banks (D-SIBs) and small and medium size deposit-taking institutions (SMSBs) include the Basel Capital Adequacy Return (BCAR), Leverage Requirements Return (LRR), Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR), Net Cumulative Cash Flow (NCCF), and the Operating Cash Flow Statement (OCFS) returns. The internal audit assurance requirements for capital, liquidity, and leverage returns of D-SIBs and SMSBs commence in fiscal 2023.

    Risk outlook for 2022-23

    The report on annual risk outlook sets out the following work priorities of OSFI for the coming months:

    • As part of its ongoing work, OSFI plans to conduct a general policy review of residential mortgage and underwriting practices as set out Guideline B-20 in 2023. 
    • In consideration of the pandemic-related and ongoing economic headwinds, OSFI will defer some of its non-financial risk regulatory initiatives. Respective timelines for issuance of draft and final guidance on third-party risk, operational risk and resilience, and culture risk management will be extended until early-to-mid 2023.  A planned consultation on revisions to Guideline E-23 on model risk management is deferred to mid-2023.
    • While OSFI expects to release the final Guideline B-15 on Climate Risk Management in the first quarter of 2023, OSFI will continue to review the feedback received during the consultation on the draft Guideline. The Guideline will also align with the International Sustainability Standards Board standards, which are not yet final. These factors, among others, could result in a delay to the release of the final Guideline.
    • For deposit-taking institutions, a planned consultation on Guideline B-11 on unencumbered assets and pledging is being delayed to early 2024.
    • In response to rising technology and cyber threat risks, OSFI recently issued for consultation Draft Guideline B-13 titled Technology and Cyber Risk Management. This draft Guideline sets out expectations for sound technology and cyber risk management and requires financial institutions to have in place measures that promote resilience to cyber events and technology disruptions. The final version of Guideline B-13 is expected to be released in 2022.
    • In the spring of 2023, OSFI plans to consult on a draft revised Guideline E-21 on operational risk management, with revisions focusing on operational resilience while reinforcing operational risk management.
    • Building on OSFI’s 2021 discussion paper on climate-related financial risks and the joint Bank of Canada-OSFI pilot project on transition risk scenarios, OSFI will issue guidance to set out its expectations of institutions’ climate risk management and climate-related financial disclosures in 2022-23.
    • OSFI expects to release draft revisions to Guideline B-10 for public consultation in Q2 2022 to Q1 2023. OSFI is repositioning the current Guideline B-10 on Outsourcing of Business Activities, Function and Processes to a Guideline on Third-Party Risk Management to better reflect a more comprehensive set of third-party risks within an expanded third-party ecosystem. The revised guideline will place greater emphasis on governance and risk management programs. It will set outcomes-focused, principles-based expectations for institutions supporting the sound management of third-party risk. It will call on institutions to identify, assess, monitor, and manage all third-party arrangements, in proportion to the criticality and risk of the arrangement.


    Related Links



    Keywords: Americas, Canada, Banking, Guideline B 20, Mortgage Lending, Lending, Basel, Reporting, Work Priorities, Regtech, Third Party Risk, Cloud Computing, Regulatory Timelines, OSFI

    Featured Experts
    Related Articles

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793