By James Langton
(August 23 – 12:50 ET) – The Office of the Superintendent of Financial Institutions will now consider applications from federally-regulated deposit-taking institutions to increase their ratio of asset to capital multiples.
OSFI says representatives from several deposit-taking institutions have pointed out that institutions with primarily low risk-weighted assets should be allowed to increase their ratio of assets to capital multiple under current capital adequacy requirements.
OSFI says it will consider allowing banks and others to go from current multiples of 20 up to as high 23, considering factors such as the firm’s operating and management experience, the strength of parent, the diversification of assets, the type of assets and appetite for risk.
To be considered, firms must meet or exceed their risk-based capital targets, have at least $100 million in total capital and well-managed operations.
Any firm which is allowed an increased multiple will be expected to provide an annual report from its CFO showing that it continues to meet the conditions required for the initial application.