From the Regulators

The revisions result from the adoption of IFRS 9 accounting standards by deposit-taking institutions in 2018

By James Langton |

The Office of the Superintendent of Financial Institutions (OSFI) has released the final version of the capital adequacy requirements (CAR) guideline, and confirmed its plans for future changes to the capital adequacy framework.

The revisions relate primarily to the capital treatment of allowances as a result of the adoption of IFRS 9 accounting standards by deposit-taking institutions in 2018.

The federal regulator doesn't expect a widespread material impact on capital from the new standard, OSFI says in its announcement, so it has decided that it's not necessary to phase in the requirements.

The final revisions to implement the regulatory capital adjustments for holdings of instruments issued by the large (systemically-important banks) to meet their total loss absorbing capacity (TLAC) requirements, will be issued at a later date, OSFI says.

Additionally, the regulator intends to implement the new standardized approach to counterparty credit risk, and the revisions to the capital requirements for bank exposures to central counterparties (CCPs), in the first quarter of 2019. OSFI has extended the deadline for implementing these requirements to match the timelines of regulators in other markets.

OSFI also confirms that it expects to implement the revised securitization framework agreed by global regulators in Q1 2019.

"This extended timeline will allow us to reflect the treatment related to simple, transparent, and comparable (STC) criteria for short term securitization exposures, which has yet to be finalized," Carolyn Rogers, assistant superintendent, regulation sector, says in a letter to banks.