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Advancing a more resilient and proportional banking regulatory framework in Canada

OSFI | March 11 2021

OSFI - Advancing a more resilient and proportional banking regulatory framework in CanadaOSFI launches consultations on Basel III implementation and a new tailored approach to capital and liquidity requirements for smaller, less complex banks

OTTAWA ─ March 11, 2021 Office of the Superintendent of Financial Institutions

The Office of the Superintendent of Financial Institutions (OSFI) plays an essential role in building and preserving resiliency in Canada’s financial system. OSFI’s commitment to implementing the international Basel III Framework has strengthened Canadian banks and improved their ability to handle financial shocks, so they can continue to support economic growth while remaining competitive.

Today OSFI launched an industry consultation on proposed regulatory changes to introduce the latest and final round of Basel III reforms into its capital, leverage and related disclosure guidelines for banks. OSFI’s proposals are in line with the international standards set by the Basel Committee on Banking Supervision (BCBS), while reflecting the Canadian market. Along with these updates, OSFI is proposing changes to enhance proportionality in its capital and liquidity regimes so they remain appropriate for smaller, less-complex banks.

See:  Review: Financial Consumer Agency of Canada (FCAC) submission to Advisory Committee on Open Banking

Enhancing transparency and improving comparability in disclosure requirements

In addition, OSFI is consulting on updates to its Pillar 3 Disclosure Guideline. These proposed changes enhance transparency surrounding the capital, leverage and liquidity positions of Canada’s largest banks while ensuring comparability and consistency with the disclosures of their global peers. Similar but proportional updates are being developed for Canada’s smaller, less-complex banks.

Tailoring capital and liquidity expectations for small- and medium-sized banks (SMSBs)

OSFI is unveiling the SMSB Capital and Liquidity Requirements Guideline, a new guideline that outlines revisions to the capital and liquidity frameworks for SMSBs which are more tailored to reflect the unique attributes of these institutions. OSFI used input from its January 2020 consultative document: Advancing Proportionality to design the new framework.

Questions for SMSBs:

  1. For Category I, II and III SMSBs, if OSFI were to adopt Pillar 3 disclosures from the Basel Framework Disclosure Requirements, which disclosures would be particularly challenging to prepare among the following risk categories:
    • Credit risk
    • Counterparty credit risk
    • Securitisation
    • Operational Risk
    • Remuneration
    • Comparison of modelled and standardised RWA (A-IRB approved SMSBs only)?

    Please provide your rationale.

    OSFI is seeking input on its proposals until June 4, 2021, while consultation on changes to its disclosure guideline is open until July 2, 2021. OSFI will publish a summary of comments with the release of its final guidance in late 2021.

View the original press release --> here

 

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