OTTAWA, March 27, 2020 /CNW/ - Today the Office of the Superintendent of Financial Institutions (OSFI) announced a series of regulatory adjustments to support the financial and operational resilience of federally regulated banks, insurers and private pension plans. This includes adjusting a number of regulatory capital, liquidity and reporting requirements.
These measures, along with the delays of previously planned regulatory changes, are designed to help reduce some of the operational stress on institutions. They also ensure that OSFI's guidance is appropriate for these extraordinary circumstances while remaining risk-focused and forward-looking.
Sector-specific measures to help respond to impacts stemming from COVID-19
Each sector that OSFI oversees has different regulatory obligations and requirements. Details on the sector-specific measures are outlined in three targeted industry letters.
Key measures announced for banks include:
- Adjusting capital and liquidity measures so that they are suited for these unprecedented circumstances.
- Delaying implementation of the remaining measures of the Basel III international capital standard until 2023 consistent with the decision of the Basel Committee's oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS) (view release).
- 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. This is to assist banks in responding to customers managing through hardships caused by recent developments.
- Delaying the implementation of revised minimum capital and liquidity requirements for small and medium sized banks until 2023.
- Providing guidance on applying IFRS 9 during this extraordinary period.
In addition to these measures, OSFI has established capital and liquidity buffers so they are available to be used at times like these. On March 13, OSFI lowered the Domestic Stability Buffer by 1.25 percentage points to 1%, which increased the lending capacity of Canada's largest banks by $300 billion.
For more detail please see the letter OSFI has issued to Federally Regulated Deposit Taking Institutions.
Key measures announced for insurers include:
- 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.
For more detail please see the letter OSFI has issued to Federally Regulated Life and Property & Casualty Insurers.
Key measures announced 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.
For more detail please see the letter OSFI has issued to Federally Regulated Private Pension Plans.
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"The regulatory changes we are announcing today will ensure that our capital and liquidity requirements are fit for purpose in today's extraordinary conditions. We are also acting to alleviate some of the pressure on federally regulated banks, insurers and private pension plans so that they can focus their efforts on the most critical operational areas during the current disruption." — Jeremy Rudin, Superintendent.
About OSFI
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.
OSFI supervises more than 400 federally regulated financial institutions and 1,200 pension plans to determine whether they are in sound financial condition and meeting their requirements.
SOURCE Office of the Superintendent of Financial Institutions
For further information: Media Contact: OSFI - Public Affairs, [email protected], 343-550-9373
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